Tracing Similar Products with Process Costing
In This Chapter
Understanding when process costing should be used
Using equivalent units to assign costs
Applying the weighted average method of process costing
Implementing the FIFO method of process costing
Putting standard costs into process costing
Process costing is a costing methodology that traces costs as they move from one process or stage of manufacture to another. Along the way, you need to track the partially completed units — and the costs they incur. Process costing can be a big challenge, but in this chapter, you see several methods of tracking both the units and the costs.
You use process costing when the products you produce are similar or identical.
Process costing has the same goal as other types of costing in this book: to help you understand what is driving costs. In this chapter, you focus on the value of your inventory and computing cost of sales. You also use that info to generate financial reports, ...