Chapter 4 Flashcards
What is process costing normally used for
converting raw materials into single products on daily basis
What is job order costing typically used for?
when many different jobs or products are worked on each period
What are differences between job order and process costing
products are indistinguishable so no sense to identify materials, labor, overhead costs and accumulates cost by department
difference between process costing and job costing WIP account
each department has own WIP in process costing and WIP department A transfers to WIP Department B and materials labor OH can be added to any department
Equivalent units def
the product of the number of partially completed units and the percentage completion of those units with respect to the processing in the department aka the number of complete units that could have been obtained from the materials and effor tthat went into the partially completed units
FIFO method of process costing definition
method in which equivalent uinits and unit cost relate only to work done during current period
weighted average method of process costing def
blend together units and costs from current period with units and costs from prior period; equivalent units are number of units transferred to next department plus equivalent units in ending WIP; each unit transferred out of department count as one equivalent unit
What is units completed and transferred to next department consist of in weight avg method?
beginning work in process (units x % complete) + units started and completed = units completed
What does ending WIP consist of in wegith avg method
ending WIP (units x % complete)
Do you use total cost in beginning inventory or total cost added in department when calculating cost per equivalent unit in weight avg method?
no
How do you calculate cost per equivalent unit in weight avg method?
cost of beginning WIP for (mat or CC) + cost added during period (mat or CC) / Equivalent uints of prod (mat or CC)
Cost of units transferred out Weighted Average Method
Units completed and transferred to next department (Mat or CC) x cost per equivalent unit (Matt or CC)
units transferred out FIFO
consists of units from beginning inventory that were completed and transferred out and other part consists of units that were both started and completed during current period
work expended during current period FIFO
consists of beginning and ending WIP (so both converted to equivalent units basis)
beginning WIP in FIFO represents what?
equivalent units represent the work done to complete the units
