LO 5.1Would a pharmaceutical manufacturer use process or job order costing? Why?
LO 5.1What is the primary purpose of process costing?
LO 5.2Explain conversion costs using an example.
LO 5.2What are equivalent units of production, and how are they used in process costing?
LO 5.2Why is the number of equivalent units for materials only sometimes equal to the equivalent units for conversion?
LO 5.3What is the weighted-average method for computing the equivalent units of production?
LO 5.4Why does each department have its own work in process inventory?
LO 5.5Match each term with its description.
|A. conversion costs||i. total of direct material costs and direct labor costs|
|B. cost of goods sold||ii. manufacturing costs of the items sold|
|C. cost of production report||iii. number of units produced if each unit was produced sequentially|
|D. cost per equivalent unit||iv. total of direct labor costs, indirect labor costs, indirect material costs, and manufacturing overhead|
|E. equivalent units of production||v. where costs in a process cost system are reported before being applied to the product|
|F. manufacturing department||vi. detailed listing of the total costs of the product including the value of work in process|
|G. prime costs||vii. cost of materials or conversion for a specific department during production|
|H. transferred out costs||viii. product of the total cost per unit and the number of units completed and transferred during the time period|
LO 5.5How is manufacturing overhead handled in a process cost system?