Chapter 8 -Process Costing

Equivalent units

Number of complete physical units to which units in inventories are equal in terms of work done

• Assume all units have the same cost

• The issue is that some units are not complete

Steps to Assign Costs to Products:

1. Measure the physical flow of resources

2. Compute the equivalent units of production

3. Identify the costs to assign to products

4. Compute the costs per equivalent unit

5. Assign product cost to batches of work

Weighted-average process costing

Inventory method that for product costing purposes combines costs and equivalent units of a period with the costs and the equivalent units in beginning inventory.

Operations costing

Hybrid costing system used in manufacturing goods that have some common characteristics and some individual characteristics.