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Video of Process Costing Explained Cost Accounting CPA Exam BAR CMA Exam in Costs Accounting course by Farhat Lectures. The # 1 CPA & Accounting Courses channel, video No. 12 free certified online
What is process costing and how do you compute equivalent units? In this cost and managerial accounting lecture, Professor Farhat explains process costing using the weighted average method, covering conversion costs, equivalent units of production, cost per equivalent unit, cost assignment, and cost reconciliation. CPA and CMA candidates and accounting students will find this essential BAR exam material.
Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students.
Video Timeline & Key Concepts:
0:00 — Introduction and goal of process costing
1:00 — The weighted average method
1:43 — Conversion costs
2:14 — Equivalent units of production
7:20 — Computing physical flow and equivalent units
10:00 — Cost per equivalent unit
12:23 — Assigning costs to transferred and ending units
13:44 — Cost reconciliation
Frequently Asked Questions:
What is the goal of process costing?
Each department must calculate two numbers: the cost of its ending work in process inventory and the cost of the completed units transferred to the next stage of production.
What are equivalent units of production?
Equivalent units express partially completed units in terms of fully completed units, allowing costs to be spread across both finished and in-process work.
What are conversion costs?
Conversion costs are the combination of direct labor and manufacturing overhead, often grouped together because direct labor is a relatively small portion of cost in many modern processes.
How does the weighted average method work?
The weighted average method blends the costs and units from the beginning inventory with those added during the current period, without separating prior-period and current-period work.
Is this tested on the CPA exam?
Yes. Process costing is tested in the BAR section and on the CMA exam as part of cost accounting.
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