The process costing of a manufactured product accumulates the costs when a large volume of identical units is produced. The assumption when designing a process costing system of manufactured products is that the total cost of a single produced unit is the similar others, and there is one does not have to tracking information at every individual unit level (Ahmed, 2019) . Therefore, to design a process costing system that would effectively identify resources and logistic cost of a manufactured product, I would suggest the five steps; A) analyzing the flow of the manufactured units to determine how the cost should be added across the whole process (Kim et al., 2015). B) Converting the inventory to articulate the equivalent unit where equivalent means the amount of units produced in a particular production stage. C) identify the total cost resulting from whole production and logistics, including direct labor, direct materials and other manufacturing overheads that are not accounted for in the primary direct labor and direct materials. D) calculating the average costs per equivalent unit after the total cost in every process has been identified and added to acquire a total cost. This total cost is divided by total equivalent cost which gives out the average equivalent costs per unit. E) lastly is allocating cost to all units and the work in the process units (Fisher & Krumwiede, 2012) . This system becomes the standard process costing systems which are adjusted when changes in manufacturing occur.
Response to Autumn Harp
Great post, Harp! The instructions were followed very well since you have outlined the specific steps that need to be followed in designing the process costing system for a manufactured product. Steps from analyzing the flow of the actual units all the way to the last step of allocating costs to all the finished units in process units and every step well outlined. Great post!
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References
Ahmed, R. A. (2019, October ). Process Costing. INTERDISCIPLINARY RESEARCH AND ACADEMIC ITEMS: A PROJECT Accounting . doi:DOI:10.13140/RG.2.2.17135.79526
Fisher, J. G., & Krumwiede, K. (2012, February 21). Product costing systems: Finding the right approach. Journal of Corporate Accounting & Finance, 233 , 43-51. Retrieved from https://doi.org/10.1002/jcaf.21752
Kim, S., Ko, W., & Bang, S. (2015, August 14). Analysis of Unit Process Cost for an Engineering-Scale Pyroprocess Facility Using a Process Costing Method in Korea. 8 (8). Retrieved from https://doi.org/10.3390/en8088775
