Q14RQ - Horngren'S Financial And Managerial Accounting

Question

 What is the weighted-average method for process costing systems?

Step-by-Step Solution

Answer

The weighted average method for the process costing system combines the beginning work-in-process cost and the cost added into the cost pool.

Step 1: Meaning of Process Costing

The process costing system of determining the manufacturing cost of the units is adopted by the companies engaged in manufacturing the product that passes through a series of production processes.

Step 2: Weighted average method for process costing.

While computing the cost of the product in the process costing system by the weighted average method is done by adding the opening work in the process amount (including the direct material and the conversion cost) and the cost incurred during the year.