# Chapter 3

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1. Process cost systems
• Used to apply costs to similar products that are mass-produced in a continuous fashion
• Used when a large volume of uniform or relatively homogeneous products is produced
2. Job order cost and process cost systems are similar in three ways
• The manufacturing cost elements.
• The accumulation of the costs.
• The flow of costs.
3. The differences between a job order cost and a process cost system
• Documents used to track costs.
• The number of work in process accounts used.
• The point at which costs are totaled.
• Unit cost computations.
4. Equivalent units of production
Measure the work done during the period, expressed in fully completed units
5. The formula to compute equivalent units of production is as follows
Units completed and transfered out + equivalent units of ending work in process
6. Weighted-average method
Used to compute equivalent units of production which considers the degree of completion of the units completed and transferred out and the ending work in process
7. Conversion costs
The sum of labor costs and overhead costs
8. Two equivalent unit computations are necessary for material and conversion costs
• Units completed and transfered out for material + equivalend units of ending work in process for material
• Units completed and transfered out for conversion costs + equiavaled units of ending work in process for conversion costs
9. Production cost report
An internal report for management that shows both production quantity and cost data for a production department
10. To complete a production cost report, the company must perform four steps
• Compute the physical unit flow.
• Compute the equivalent units of production.
• Compute unit production costs.
• Prepare a cost reconciliation schedule.
11. Physical units
Actual units to be accounted for during a period, irrespective of any work performed
12. Total units to be accounted for
The sum of the units (costs) started (or transferred) into production during the period plus the units (costs) in process at the beginning of the period
13. Total units accounted for
The sum of the units (costs) transferred out during the period plus the units (costs) in process at the end of the period
14. Unit production costs
Expressed in terms of equivalent units of production. When equivalent units of production are different for materials and conversion costs, three unit costs are computed: (1) materials, (2) conversion, and (3) total manufacturing.
15. Computation of unit materials cost, unit conversion cost, and total manufacturing cost per unit is as follows
• Total material cost / equivalend units of material = unit material cost
• Total conversion costs / equivalend units of conversion costs = unit conversion cost
• Unit material cost + unit converstion cost = total manufacturing cost per unit
16. Cost reconciliation schedule
A schedule that shows that the total costs accounted for equal the total costs to be accounted for
17. Operations costing
A combination of a process cost and a job order cost system, in which products are manufactured primarily by standardized methods, with some customization
18. Using the FIFO method, equivalent units are the sum of the work performed to:
• Finish the units of beginning work in process inventory.
• Complete the units started into production during the period (referred to as the units started and completed).
• Start, but only partially complete, the units in ending work in process inventory.
 Author: Anonymous ID: 8480 Card Set: Chapter 3 Updated: 2010-02-28 21:10:23 Tags: Chapter 3 Folders: Description: Chapter 3 Show Answers: