Accounting › Section R · Job order and process costing › Topic R.7

Equivalent units in the first process

At the end of every month some units are still half made, yet the department's costs must be split fairly between the units it finished and the ones it did not. Four steps, built on equivalent units, do the job.

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Costing the first department
Step 1: account for the physical units
Step 2: compute equivalent units
Worked example: May, steps 1 and 2
Step 3: cost per equivalent unit
Step 4: assign and reconcile costs
Worked example: May, steps 3 and 4
Worked example: June, with beginning WIP
Common mistakes to avoid
Key takeaways

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