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