Determine the Units to be Assigned Cost
What are the two categories of units a department must account for?
Units Transferred Out and WIP
What is the formula for equivalent units of a partially complete batch?
Whole Units X Percent Complete
What is the formula for Cost per Equivalent Unit?
Total Cost / Total Equivalent Unit
Alll allocated costs across steps 1, 2, and 3 must sum to what?
The total production costs to account for
What types of companies use process costing?
Companies that produce identical products in a continuous process
What must the total units to be assigned costs always equal?
Total Units Accounted For
When materials are added at the start of the process, how many material equivalent units does beginning WIP contribute in the current period?
0
Under FIFO, what costs are included in the cost per equivalent unit calculation?
Current Costs, not costs carried in beginning WIP
What do you multiply remaining equivalent units by to find the cost to complete the beginning WIP?
The cost per equivalent unit
What is the main difference between process costing and job order costing?
Process costing tracks costs by department, and job order costing tracks costs by job
What Equals the total units to account for?
Beginning WIP + Inventory started during the period
Why are materials and conversion equivalent units calculated separately?
Because materials and conversion costs enter production at different times and rates
If DM costs are $66,000 and equivalent units for materials are 60,000, what is the CPEU?
$1.10 per unit ($66,000/60,000)
What is true about units that were started and completed in the same period?
They are 100% complete for both materials and conversion costs
When units are finished in one department, where do they go?
They move to the WIP account of the next department
What are examples of units used in process costing?
Tons, gallons, pounds, barrels, etc.
A batch of 4,000 units is 75% complete for conversion. What are the conversion equivalent units?
3,000 equivalent units (4,000 x 75%)
If conversion costs are $17,775 and conversion equivalent units are 59,250, what is the CPEU?
$0.30 per unit ($17,775/59,250)
How do you find the total costs of all units transferred out?
Add the cost of completing step 1 to the cost of step 2
Which costing method works best for a company that makes custom, one-of-a-kind products?
Job order costing
If beginning WIP is 5,000 units and 60,000 units are started in the period, what are total units to account for?
65,000 Units
Beginning WIP of 5,000 units was 70% complete. How many conversion equivalent units are needed to finish it this period?
1,500 equivalent units (5,000 x 30%)
CPEU is computed separately for what 2 components?
DM and Conversion
How do you calculate the cost of ending work in process inventory?
Multiply equivalent units by the cost per equivalent unit for materials, and then do the same for conversion, and add them together
What is the purpose of a cost of production report?
It shows the units the department is accountable for and splits costs between completed and partially completed units