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