Chapter 4: Process Costing Flashcards
What is a Conversion Cost?
Direct Labor Cost + MO Cost
Equivalent Units
Complete whole units obtained from materials and effort contained in partially completed units
Equivalent units of production (Weighted-Average)
Units transferred to the next department + WIP inventory
FIFO Method
Calculating Unit Costs Based on Costs and Outputs from the current period
Operation Costing
System used when products have a mix of common and individual characteristics
Process Costing
Used when homogeneous products are produced on a continuous basis
Procressing Department
Where work is performed on a product, and where materials, labor, or overhead costs are added
Weighted-Average Method
Calculates unit costs by combining costs and output from past and present periods
Job-Order Costing
Used in jobs requiring unique products such as furniture, or special-order printing
When is Process Costing used?
In industries that convert raw materials into uniform products
What is the order of Processing Departments?
(a) Raw Material Inputs, (b) Processing Department, (c) Partially Completed Goods, (d) Processing Department, (e) Partially Completed Goods, (f) Packing and Inspecting, (g) Finished Goods
Concept #1 of Process Costing
There is more than on way to calculate unit costs such as WA or FIFO.
Concept #2 Process Costing Computation
Departments need to calculate unit costs for manufacturing costs separately
Concept #3 of Process Costing
Equivalent units = Partially completed units x % completion
Step-by-Step Weighted-Average Method
Units transferred + Equivalent units in ending WIP inventory
