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Financial Terms | |
Process costing |
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Definition of Process costingProcess costingA method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced. Process costingA costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products.
Related Terms:FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per process costing systema method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products; strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the weighted average method (of process costing)the method of cost assignment that computes an average cost per cost of production reporta process costing document that ![]() equivalent units of production (EUP)an approximation of the number of whole units of output that could have been First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest hybrid costing systema costing system combining characteristics Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. absorption costinga cost accumulation and reporting Absorption costingA methodology under which all manufacturing costs are assigned Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. activity based costing (ABC)A relatively new method advocated for the activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; ![]() Activity-based costing (ABC)A cost allocation system that compiles costs and assigns attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires business process reengineering (BPR)the process of combining information technology to create new and more effective Corporate processing floatThe time that elapses between receipt of payment from a customer and the cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course Diffusion processA conception of the way a stock's price changes that assumes that the price takes on all direct costingsee variable costing Direct costingA costing methodology that only assigns direct labor and material costs full costingsee absorption costing In-house processing floatRefers to the time it takes the receiver of a check to process the payment and Ito processStatistical assumptions about the behavior of security prices. For Job costingA method of accounting that accumulates the costs of a product/service that is produced either job order costing systema system of product costing used joint processa manufacturing process that simultaneously Kaizen costingThe process of continual cost reduction that occurs after a product life cycle costingthe accumulation of costs for activities that Lifecycle costingAn approach to costing that estimates and accumulates the costs of a product/service over multiprocess handlingthe ability of a worker to monitor Price discovery processThe process of determining the prices of the assets in the marketplace through the ProcessA series of linked activities that result in a specific objective. For example, the process benchmarkingbenchmarking that focuses on practices and how the best-in-class companies achieved their results process complexityan assessment about the number of processes through which a product flows Process flow productionA production configuration in which products are continually process mapa flowchart or diagram indicating every step process productivitythe total units produced during a period process quality yieldthe proportion of good units that resulted from the activities expended processing timethe actual time consumed performing the product- (or process-) level costa cost that is caused by the development, production, or acquisition of specific products or services Purchased In-Process Research and DevelopmentUnfinished research and development that is acquired from another firm. relevant costinga process that compares, to the extent possible Reprocessed materialMaterial that has been reworked and returned to stock. statistical process control (SPC)the use of control techniques that are based on the theory that a process has natural variations in it over time, but uncommon variations Target costingA method of costing that is concerned with managing whole-of-life costs of a product/service during the product design phase – the difference between target price (to achieve market share) and the target profit margin. target costinga method of determining what the cost of a Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. variable costinga cost accumulation and reporting method Work-in-processAny items being converted into finished goods or released from Work-in-process inventoryInventory that has been partially converted through the KaizenA method of costing that involves making continual, incremental improvements to the kaizenthe Japanese word for continuous improvement Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |