1) In a process costing system, costs flow into finished goods inventory only from the work in process inventory of the last process.
2) Costs are transferred, along with the units, from one WIP inventory to the next.
3) If a company has a series of processes, the company uses multiple work-in-process accounts.
4) The entry to transfer goods in process from Dept. A to Dept. B includes a credit to WIP inventory in Dept A.
5) Transferred-in costs are incurred in a previous process and are carried forward as part of the product’s cost when it moves to the next process.
6) Second or subsequent departments must account for units and costs transferred in from previous departments.
7) Assigning costs to units completed and to units in ending WIP inventory in a second department is a three-step process.
8) The cost per equivalent unit must be computed for transferred-in costs, as well as direct materials and conversions costs, in a subsequent department.
9) Product cost reports are done only for the final department in process costing.
10) When calculating equivalent units in a second or later processing department, all physical units should be considered 100% complete with respect to transferred-in work and costs.