Process costing

Process costing

Bachelor of Business Studies (BBS) — Second Year

Subject: Cost and Management Accounting (MGT 212)

Unit 5: Costing in Different Situations

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of process costing.
• Prepare the relevant cost records or calculations and interpret their use in managerial planning and control.

Curriculum Scope

• Concept, features and applications
• Comparison with job costing
• Process accounts with and without opening/closing work in progress
• Partial and total output transfers
• Normal and abnormal losses and abnormal gains
• Unit-cost computation
• Spoilage, wastage, scrap and defective units
• Inter-process profit and unrealized-profit reserve

Detailed Microsyllabus

1. Process-costing foundations

   1. Continuous production and process accounts.
   2. Applications and comparison with job costing.
   3. Transfers of all or part of process output.

2. Losses and unit cost

   1. Normal loss and expected output.
   2. Abnormal loss and abnormal gain.
   3. Calculate unit costs and account for loss proceeds as supplied.

3. Work in progress

   1. Opening and closing unfinished units.
   2. Stage of completion and equivalent-output reasoning.
   3. Allocate cost to completed output and closing work in progress.

4. Other process issues

   1. Spoilage, wastage, scrap and defective units.
   2. Inter-process transfer prices and embedded profit.
   3. Calculate the unrealized-profit reserve required by the exercise.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 31-34.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here.