Materials are placed into production in the Blending Department, and labor and factory

overhead are added. When the work is finished in the Blending Department, it moves to the
Testing Department. The second process, and any succeeding processes, may add more
materials or simply work on the partially completed input from the preceding departments,
adding only labor and factory overhead, as in this example. After the product has been
processed by the Terminal Department, it is a completed product and becomes a part of
finished goods inventory.
Parallel Flow:
In a parallel product flow, certain portion of the work are done simultaneously and then
brought together in a final process or processes for completion and transfer
to finished goods inventory. As in the previous illustration, materials may be added in
subsequent processes.

Selective Product Flow:
In a selective product flow, the product moves to different departments within the plant,
depending upon the desired final product. For example, in meet processing, after the initial
butchering process, some of the product goes directly to the Packaging Department and
then to finished goods inventory; some goes to the Smoking Department and then to the
Packaging Department and finally to finished goods inventory; Some goes to the
grinding department, then to the packaging department and lastly to finished goods
inventory. Transfer of costs from the Butchering Department involves joint cost allocation,
discussed on By-Products and Joint Products Costing page.
Procedures for Materials, Labor, and Factory Overhead Costs Accumulations:
In process costing, materials, labor, and factory overhead costs are accumulated in the
usual accounts, using normal cost accounting procedures. Costs are then analyzed by
departments or processes and charged to departments by appropriate journal entries. The
details involved in process costing are usually fewer than those in the job order costing,
where accumulation of costs for many orders can become unwieldy.
Materials Costs:
In job order costing system, materials requisitions are used to charge jobs for
direct materials used. If requisitions are used in process costing, details are considerably
reduced because materials are charged to departments rather than to jobs, and the number
of departments using materials is usually less than the number of jobs a firm might handle
at a given time. Frequently materials are issued only to the process-originating department;
subsequent department other than the first, they are charged to that department
performing the specific operation.