Describe the Flow of Materials in a Process Cost Accounting

question 79

Essay

Describe the flow of materials in a process cost accounting system, including accounts used.

---

Definitions:

Units Transferred Out

In a production or manufacturing process, this refers to the number of units completed and moved out of a process or department during a given period.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all items available for sale during the period.

First-In, First-Out Methods

An inventory valuation method where the first items produced or purchased are the first ones sold, affecting the cost of goods sold and inventory valuation.

First-In, First-Out Method

An inventory valuation method where the first items placed into inventory are the first ones sold.