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Process costing perspectives Chapter 14 Process costing perspectives

Process costing—more than one department

Cost flows—process costing— more than one department

Cost of production reports— more than one process Step 1 Identify physical units Step 2 Calculate equivalent completed units Conversion costs Direct materials Step 3 Identify total costs Step 4 Compute equivalent unit costs Step 5 Allocate total costs

Valuation of inventory Weighted average FIFO Work already completed at the start of the period Work completed during the period Total cost transferred out FIFO—alternative method

Process costing and lost or spoiled units Spoilage Lost units (can also be referred to as spoilage) Types Normal Abnormal

Process costing and lost or spoiled units (cont.) Accounting for normal spoilage Method 1 FIFO Weighted average Method 2 Accounting for abnormal spoilage

Chapter 15 Discusses Operation costing