Introduction to Accounting Fundamentals of Management Accounting: Lesson 5 Process-Based Costing

Process-based costing, is a costing method used in managerial accounting to allocate costs to products or services based on the specific activities involved in their production or delivery. Unlike traditional costing methods that allocate costs based on direct labor or machine hours, process-based costing focuses on the various processes or activities that consume resources within an organization. The lesson will cover the basics of process costing, including its definition, components (direct materials, direct labor, and overhead), calculation of equivalent units, assigning costs, and methods such as FIFO and weighted average. It will involve interactive discussions, examples, exercises, and practical applications to reinforce learning.

Learning Oucomes:

• Explain when process costing systems are appropriate;
• Explain the accounting treatment of normal and abnormal losses;
• Prepare process, normal loss, abnormal loss and abnormal gain accounts when there is no ending work in progress;
• Explain, calculate and value equivalent units;
• Explain how joint and by-products are treated in process costing

All lesson materials include reading materials, various exercises, activities, and quizzes. The PowerPoint presentations are fully animated with scripts and ready to deliver. They contain a mixture of topic information, examples, and activities/exercises for each topic in the specification for the learning outcomes. All lessons are suitable for about 1 -2 hour of teaching time and 1-2 hours tutorial in which class exercises and homework are integrated into lessons where appropriate.

We wish you all the best for the study, and should you have any further questions, please get in touch.