Process Costing and Hybrid Product Costing Systems

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4
Chapter Four

• Process Costing and Hybrid Product-Costing
  Systems

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Comparison of Job-Order Costing and Process
Costing

• Used for production of small, identical, low
  cost items.
• Mass produced in automated continuous
  production process.
• Used for milk, beer, cheese, paper.

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COMPARISON OF SYSTEMS
10,000 Units
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FLOW OF COSTS IN PROCESS COSTING
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Equivalent Units A Key Concept

• Costs are accumulated for a period of time for
  products in work-in-process in depts.
• Units in work-in-process inventory at beginning
  end of period are only partially complete. (DM,
  DL MOH)
• Equivalent units expresses partially completed
  products as a of fully completed units

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Equivalent Units Example
Two one-half completed products are equivalent to
one completed product.
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So, 10,000 units 70 percent completeare
equivalent to 7,000 complete units.