Process Cost Systems

What type of product or business would use a process cost system?

What does it cost production report? Does it track units and costs? What about partially completed units?

Understand what FIFO and LIFO are and how the use of each affects COGS, profits and taxes.

Method for Allocating Costs:

What is an equivalent unit? Are equivalent units tracked separately for direct materials and conversion costs? Why?

Be able to compute Equivalent units for Materials and Conversion costs. Know why it matters whether costs are added at the beginning (materials usually) or along the way in stages (conversion costs usually). You need to understand how this is done.

Be able to derive the Direct Materials Cost per Equivalent Unit and the Conversion Cost per Equivalent Unit. Then, be able to allocate costs to the units in a given Stage of Production.

How do you calculate the Yield of a process?

Understand and be able to use the weighted average method to determine the allocation of factory overhead.