Cost Accting Ch 5 Key Terms pt.txt

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Anonymous
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46356
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Cost Accting Ch 5 Key Terms pt.txt
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2010-10-31 22:03:54
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Cost
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Process Accounting
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  1. Average cost method
    A commonly used procedure for assigning costs to the ending inventories under a process cost accounting system. Under this method, ending inventories are valued using an average unit cost, computed as follows: (cost of beginning work in process + current period production costs) divided by the total equivalent production for the period.
  2. Cost center
    A unit of activity, such as a department, to which costs may be practically and equitably assigned.
  3. Cost Object
    The item for which cost is being accumulated; the production department for example.
  4. Cost of production summary
    A report that summarizes production costs for a period for each department and provides the information necessary for inventory valuation.
  5. Equivalent production
    The number of units that could have been completed during a period using the total production costs for the period.
  6. First-in, first-out (FIFO) method
    An inventory costing method based on the assumption that materials issued are taken from the oldest materials in stock. Thus, materials issued are costed at the earliest prices paid for materials in stock, and ending inventories are costed at the most recent purchase prices.
  7. Job order cost system
    A method or system of cost accounting that is appropriate for manufacturing operations that produce custom-made or special-order goods. Manufacturing costs are accumulated separately for each job and recorded on a job cost sheet.
  8. Process cost system
    A method or system of cost accounting that is appropriate for manufacturing operations that produce continuous output of homogeneous products. Manufacturing costs are accumulated separately for each department and are recorded on a cost of production report.
  9. Production report
    A report, used in a process cost accounting system and prepared by the department head, showing beginning units in process, number of units completed during the period, ending units in process, and their estimated stage of completion.
  10. Stage of completion
    The fraction or percentage of materials, labor, and overhead costs of a completed unit that have been applied during the period to goods that have not been completed.

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