Cost Accounting For Dummies, 2nd Edition

Chapter 16

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, ...