Using process costing managers can calculate costs per equivalent unit using the weighted average or the FIFO method.

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Process costing is a method of determining the cost of production of a product by dividing the total cost by the number of units produced. It is used in industries where large quantities of identical or similar products are manufactured. In process costing, managers can calculate costs per equivalent unit using the weighted average or the FIFO method. The weighted average method takes into account all the costs incurred during the production process and calculates an average cost per unit. The FIFO method assumes that the units produced first are sold first and calculates the cost of goods sold based on the cost of the first units produced. Both methods are commonly used in process costing.

Using Process Costing Managers Can Calculate Costs Per Equivalent Unit