Accounting › Section R · Job order and process costing › Topic R.6
Process costing and conversion costs
When thousands of identical units flow through a series of departments, costs are tracked by department rather than by job. Process costing groups labour and overhead together as conversion costs, and that grouping is the key to costing units that are only partly made.
In this topic
- A factory of identical units
- How costs flow by department
- Conversion costs
- Worked example: sorting a department's costs
- Materials at a point, conversion throughout
- The idea of equivalent units
- Worked example: why physical units mislead
- The production cost report
- Common mistakes to avoid
- Key takeaways
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