Question

Companies such as Apple commonly prepare a process cost summary. What purposes does a process summary serve a company?

Give an example of a company and discuss what purpose a process cost summary will serve to the company.

Answer 1

The Process cost summary is helps companies in many ways.

For example

1. It can be used to provide cost information for the financial statements.

2. It is useful to identify cost charged to each product/department, and equivalent unit of productions achieved etc.

3. It helps the company to evaluate and compare performance of each department/cost center. It is very useful to identify the efficiency of each department with respect to utilization/production/wastage/costetc.

4.It helps the department managers to control and improve the performance of each department.

For example Cost Summary sheet helps Apple company to evaluate the cost of production involved in each of its departments, say manufacturing department of Screen, camera, chips etc. And it helps the company to evaluate performance of each department and helps to take remedial action in case of any issues.