Process Costing
1. Under what conditions is a process-costing system used? A process-costing system is used to determine cost of a product or service when masses of identical or similar units are produced. Industries using process costing systems include the food, textiles, and oil-refining industries. 2. How are average unit costs computed when no inventories are present? Average unit costs are computed by dividing the total costs in a given accounting period by the total units produced in that period. 3. What are the five steps in a process-costing system, and how are equivalent units calculated? The five steps in a process-costing system are (1) summarize the flow of physical units of output, (2) compute the output in terms of equivalent units, (3) summarize the total costs to account for, (4) compute the cost per equivalent unit, and (5) assign the total costs to units completed and to units in ending work-in process inventory. An equivalent unit is a derived measure of output that (a) take...