Chapter 4 - Process Costing

Equivalent Units

the product of the number of partially completed units and the percentage completion of those units with respect to the processing in the department

operation costing

used in situations where products have some common characteristics and some individual characteristics

Process Costing

used most commonly in industries that convert raw materials into homogeneous (uniform) products

equivalent units of production

The number of production units that could have been completed within a given accounting period, given the resources consumed.

conversion cost

direct labor cost plus manufacturing overhead cost

FIFO method

a process costing method in which equivalent units and unit costs relate only to work done during the current period

processing department

an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product

Weighted Average Method

blends together units and costs from the current period with units and costs from the prior period