Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

Exercise 7

Understanding the nature of process manufacturing helps to understand the nature of process costing. Using an Internet search, find the home pages of one or more cement companies where the processes used to manufacture Portland cement are described. Other Internet resources such as an online encyclopedia might also prove to be useful.
Required:
1. Describe in detail each process in the manufacture of Portland cement. Now provide a flow diagram that describes the entire manufacturing process from start to finish.
2. Identify the inputs and output(s) of each process.
3. How would you measure the output of each process? Do any of your units of measure change as you go from one process to the next? How would you deal with this change in units when calculating the cost of a unit transferred out to a subsequent process?
4. Do you think that the amount of direct materials that enter the kiln will be the same as the amount that leave it? Explain. How would you deal with the possibility that output is less than the total units of input?
5. Suppose that the output is a 50-pound bag of cement. Identify all the resources that made the manufacture of this product possible.