Chapter 4 Key Terms

Question	Answer
Conversion Cost	Direct labor cost plus manufacturing overhead cost
Equivalent Units	The product of the number of partially completed units and their percentage of completion with respect toa particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.
Equivalent units of production (weighted-average method)	The units transferred to the next department (or to finished goods) during the period plus the equivalent units in the department's ending work in process inventory.
FIFO method	A process costing method that calculates unit costs based solely on the costs and outputs from the current period.
Operation costing	A hybrid costing system used when products have some common characteristics and some individual characteristics.
Process costing	A costing method used when homogeneous products are produced on a continuous basis.
Processing department	An organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product.
Weighted-average method	A process costing method that calculates unit costs by combing costs and outputs from the current and prior periods.

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	Created by Miranda Branek about 4 years ago