Topic 5 Flashcards

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what kind of firm use process costing

• standardized production process for homogeneous products

Does each department have their own materials and WIP accounts?

Yes

what happens when partly completed units get transferred to the next department

we also transfers the incurred costs of these units to the next department’s WIP accounts

When units are completed where does total costs accumulated in WIP go

finished goods inventory account

Equivalent Units

the # of units that could be finished given the amount of work

T/F Equivalent units are calculated

separately for direct materials and

conversion work.

T

Costs accumulated during the process formula

Costs accumulated during the process = Direct

materials + Direct labor + Allocated factory

overhead

what are conversion costs

The sum of Direct labor + Allocated factory

overhead

unit product cost formula

Unit product cost = Unit Material Costs + Unit

Conversion Cost Costs,

how to find material costs

total material costs/EUs for material

weighted average cost per EU formula

FIFO Cost per EU

which is better for situation where prices/cost fluctuate
weighted average or fifo

Example 1

Example 2

example 3

does spoilage have value

yes

what is normal spoilage

part of regular operations

what is adnormal spoilage

unusual operating problems

recorded as an loss