Accounting Midterm 2 Notes

Accounting Midterm 2 Notes - Equivalent units of production...

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Chapter 4 Process costing is most commonly used in industries that convert raw materials into homogeneous products, such as bricks, soda, or paper, on a continuous basis. o A single product is produced either on a continuous basis or for long periods of time. All units of product are identical o Costs are accumulated by department o Unit costs are computed by department A processing department is an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product. Equivalent units = number of partially completed units * percentage completion o Weighted average method
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Unformatted text preview: Equivalent units of production = units transferred to the next department or to finished goods + equivalent units in ending work in process inventory • Conversion cost = direct labor cost + manufacturing overhead cost • Cost per equivalent unit = cost of beginning work in process inventory + cost added during the period/equivalent units of production • Cost of ending work in process inventory = equivalent units of production * cost per equivalent unit • Cost of units completed and transferred out = units transferred to the next department * cost per equivalent unit...
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This note was uploaded on 04/21/2008 for the course ACCY 052 taught by Professor Sullivan during the Spring '08 term at GWU.

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