ACCT 241 Chapter Four

FIFO Method

Bases costs solely on the costs and outputs from the current period

Weighted Average Method

Combines costs and outputs from current and prior periods

Equivalent Units Formula

Equivalent units = Number of partially completed units x Percentage completion

Cost of Ending Work in Process Inventory Formula

Materials cost in ending work in process inventory + Conversion cost in ending work in process inventory

Cost of Units Transferred Out Formula

Materials cost in units transferred out + Conversion cost in units transferred out

Industries/Products more suitable for process costing than job-order costing are:

Most commonly in industries that convert raw materials into homogeneous (i.e., uniform) products, such as bricks, soda, or paper, on a continuous basis.

Conversion cost is composed of _______.

direct labor and manufacturing overhead

Which of the following statements about processing costing is false?

Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.

Which of the following statements about companies that use processing costing is false?

Raw material costs are added only to the first processing department.

Total Cost to be Accounted For Formula

The cost of beginning work in process inventory + the costs added to production during the period

Examples of products that may use operation costing include:

products that are typically produced in batches, but they can vary considerably from model to model or from style to style in terms of the cost of materials. - clothing - jewelry - shoes

Process Costing accumulates costs by:

department