Chapter 21, Problem 21CDCP

To determine

Process Costing: Process costing is method of cost accounting in which all the costs that are incurred production process are recorded. Output of one process becomes input for next process. This method is used to apply cost to similar products that are bulk-produced in uninterrupted manner.

Production Cost Report: A report which gives information about the total units produced and total cost incurred during the production process is called production cost report. This report is useful for the management of the company to take decision regarding production and the measure for cost control.

Weighted Average Method: Under this method, equivalent units of production are computed by adding units completed and transferred out and the ending work in process units.

The formula of equivalent units of production under this method is:

$\left(\begin{array}{l}\text{Equivalent}\\ \text{Units}\text{of}\text{Production}\end{array}\right)=\left(\begin{array}{c}\text{Units}\text{Completed}\text{and}\text{Transferred}\text{Out}\\ +\text{Equivalent}\text{Units}\text{of}\text{Ending}\text{Work}\text{in}\text{Process}\end{array}\right)$

To prepare: Production cost report using weighted average method.