2. How do the weighted average and first-in, first-out methods of process costing differ
in their treatment of beginning Work in Process Inventory units?
3. What is an “equivalent unit of production,” and why is it a necessary concept to employ
in a process costing system?
4. Is one equivalent unit computation suﬃ
cient for all cost components? Explain your
5. What is meant by the phrase
units started and completed
? Why is this phrase more
closely associated with the first-in, first-out method of process costing than with the
weighted average method?
6. What is meant by the term
? Why does the transferred-out cost
under the WA method include only one computation but the FIFO method includes
7. How is the cost of ending inventory calculated in a process costing system?
8. Which cost component can be found in a downstream department of a multidepart-
ment production process that will not be present in the first upstream department?
9. A company has two sequential processing departments. On the cost of production
reports for the departments, will the cost per unit transferred out of the first depart-
ment always be equal to the cost per unit transferred in to the second department?
10. Why does standard costing make process costing more clerically and computationally
11. What is a hybrid costing system? In what circumstances are hybrid costing systems
12. (Appendix 2) What is meant by the “method of neglect”? How does the use of this
method affect cost of good production?
13. (Appendix 2) In a process costing system, how are normal and abnormal spoilage typi-
cally treated? Why are normal and abnormal spoilage treated differently?