Chapter Six; Process Costing
what account is credited when abnormal spoilage is written off in an actual cost system
WIP
calculate equivalent units of production
beginning WIP + completion of units in process + units started and completed + ending WIP
calculate ending WIP inventory units
beginning WIP plus units started minus units transferred out
to compute equivalent units of production using the FIFO method of process costing, work for the current period must be stated in units
completed from beginning inventory, units started and completed during the period, and units partially completed in ending inventory
abnormal spoilage can be
continuous and discrete
total variance is calculated
difference between the actual price paid for material and the standard price of the materials times the actual quantity used or purchased
primary difference between the FIFO and weighted average methods of process costing is
in the treatment of beginning WIP inventory
what are equivalent units
number of completed units that could have been produced from the inputs applied
equivalent units of production are equal to the
number of whole units that could have been completed if all work of the period had been used to produce whole units
a continuous loss
occurs evenly throughout the production process
two components of total material/labor variance are
price/rate variance and quantity/efficiency variance
what cost accumulation procedure is most applicable in continuous mass-production manufacturing environments
process costing
process costing is used in companies that
produce bricks for sale to public
a process cost system is used by a company that
produces homogeneous products
what is a hybrid costing system
products manufactured have different materials but similar processing techniques
the difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent units
residing in beginning WIP inventory
normal spoilage units resulting from a continuous process
result in a higher unit cost for the good units produced
primary purpose of using a standard cost system is
to provide a distinct measure of cost control
similarities between weighted average and FIFO method of calculating EUPs
units to account for and total cost to account for
calculate number of units started and completed
units transferred out minus units in beginning inventory