Question

Place the following Process costing steps in the correct order:

1 - Calculate equivalent units
2 - Determine the total costs to account for
3 - Analyze flow of physical units
4 - Assign total manufacturing costs
5 - Compute unit costs
A.3, 5, 2, 1, 4.
B.2, 1, 5, 4, 3.
C.2, 3, 5, 4, 1.
D.3, 1, 2, 5, 4.

Answer 1

The steps of process costing in the correct order are: Analyze flow of physical units, Calculate equivalent units, Determine total costs, Compute unit costs, and Assign manufacturing costs.

Step-by-step explanation:

The correct sequence for the process costing steps is:

1. 
   
3. Analyze flow of physical units
4. 
   
6. Calculate equivalent units
7. 
   
9. Determine the total costs to account for
10. 
    
12. Compute unit costs
13. 
    
15. Assign total manufacturing costs

This sequence of steps ensures that a company accurately allocates costs to units produced, which is essential for determining pricing, profitability, and inventory valuation. Initially, the company must analyze the physical flow of units to understand how many were started and completed during a period. Then, it calculates equivalent units, which accounts for partial work done on some units. Afterwards, it determines the total costs incurred, both for direct materials, labor, and overhead, and then computes the per-unit cost. Finally, the company assigns these manufacturing costs to the units, thus completing the process.