We provide a step-by-step illustration of process costing. Each process (or
department) in a process operation follows these steps:
Determine the physical flow of units.
Compute equivalent units of production.
Compute cost per equivalent unit of production.
Assign and reconcile costs.
Department A completed and transferred to finished goods a total of 60,000
units. Their ending inventory consisted of 40,000 units which were 80%
complete with respect to direct materials and 30% complete with respect to
conversion cost. The cost per EUP for direct materials is $4.00 and for
conversion is $3.50. The cost of ending work in process inventory is
A process cost summary summarizes the following process costing steps:
physical flow of units
total costs charged to the department
equivalent units of production
Equivalent Units of Production = Number of whole units completed and
transferred out + Number of equivalent units in ending work in process