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Key Terms

  • Process Costing: Costing system for identical products produced in large quantities
  • Equivalent Units: Number of complete units that could have been produced given work performed
  • Conversion Costs: Direct labor + Manufacturing overhead
  • Process Cost Report: Report summarizing costs and equivalent units for a process
  • Transferred-In Costs: Costs from previous processing stages transferred to current stage
  • Weighted-Average Method: Method combining beginning WIP with current costs
  • FIFO Method: Method separating beginning WIP from current costs
  • Physical Flow: Actual movement of units through production
  • Cost per Equivalent Unit: Total costs divided by equivalent units
  • Yield: Ratio of output to input in a process
  • Process: A stage or department in production
  • Department: Organizational unit where production occurs