Chapter 18 - Process Costing

First-In, First-Out Method (for Process Costing)

Determines the cost of equivalent units of production by accounting for beginning inventory costs separating from current period costs. It assumes the first units started in production process are the first units completed and sold.

Conversion Costs (Equation)

Direct Labor + Manufacturing Overhead

Weighted-Average Method (for Process Costing)

Determines the average cost of equivalent units oof production by combining beginning inventory costs with current costs.

Production Cost Report

A report prepared by a processing department for equivalent units of production, production costs, and the assignment of the costs to the completed and in process units.

Job Order Costing System

An accounting system that accumulates costs by job. Used by companies that manufacture unique products or provide specializes services.

Process Costing System

An accounting system that accumulates costs by process. Used by companies that manufacture identical unis through a series of uniform production steps or processes.

Transferred In Costs

Costs that were incurred in a previous process and brought into a later process as part of the product's cost.

Process

One of a series of steps in manufacturing production; usually associated with making large quanities of similar items.

Conversion Costs

The cost to convert raw materials into finished goods.

Equivalent Units of Production (EUP)

Used to measure the amount of materials added to or work done on partially completed units and expressed in terms of fully completed units.