Q1: Unit cost can be calculated by total cost/ total units.

For example total cost is $10 million

and total units are 1m then unit cost will be 10/1= $10/unit.

Q2: Process costing is used when there is mass production of similar products, where the costs
associated with individual units of output cannot be differentiated from each other.
In other words, the cost of each product produced is assumed to be the same as the cost of every
other product. Under this concept, costs are accumulated over a fixed period of time,
summarized, and then allocated to all of the units produced during that period of time on a
consistent basis.

Q3: An equivalent unit of production is an indication of the amount of work done by

manufacturers who have partially completed units on hand at the end of an accounting period.
Basically the fully completed units and the partially completed units are expressed in terms of
fully completed units.

Q4: six steps must be taken when deriving and assigning product cost under a process costing
system:
1. Compute the total number of physical units to account for.
2. Compute the physical units accounted for by tracing the physical flow of units.
3. Determine the number of equivalent units of production, either on the weighted average or
FIFO basis, for each cost component.
4. Determine the total cost to account for, which is the sum of beginning inventory costs and all
production costs incurred for the current period.
5. Compute the cost per equivalent unit of production for each cost component.
6. Assign the costs to the units transferred and the units in ending work in process inventory. The
method of cost assignment depends on whether weighted average or FIFO costing is used.

Q5: Weighted average costs. This version assumes that all costs, whether from a preceding
period or the current one, are lumped together and assigned to produce units. It is the simplest
version to calculate.

First-in first-out costing (FIFO). FIFO is a more complex calculation that creates layers of costs,
one for any units of production that were started in the previous production period but not
completed, and another layer for any production that is started in the current period.
Q6: The money spent on switching the processing of a product or a service between departments
of a company. Transferred-in costs combine manufacturing costs by the various departments and
production processes.
Transferred-in cost is the cost that a product accumulates during its tenure in upstream work
centers. Thus, it is the accumulated cost of a product when it first arrives in a downstream work
center. This concept is used in a process costing system.
Q7: Transferred-out cost is the cost that a product does not accumulates during its tenure in
upstream work centers. Thus, it is the accumulated cost of a product when it leaves/ departed
towards in a downstream work center. This concept is used in a process costing system
Q8: Yes it can be used. Standard costing involves the creation of estimated (i.e., standard) costs
for some or all activities within a company. The core reason for using standard costs is that there
are a number of applications where it is too time-consuming to collect actual costs, so standard
costs are used as a close approximation to actual costs.
Budgeting. A budget is always composed of standard costs, since it would be impossible to
include in it the exact actual cost of an item on the day the budget is finalized.
Inventory costing. It is extremely easy to print a report showing the period-end inventory
balances (if you are using a perpetual inventory system), multiply it by the standard cost of each
item, and instantly generate an ending inventory valuation.
Overhead application. If it takes too long to aggregate actual costs into cost pools for allocation
to inventory, then you may use a standard overhead application rate instead, and adjust this rate
every few months to keep it close to actual costs.
Price formulation. If a company deals with custom products, then it uses standard costs to
compile the projected cost of a customers requirements, after which it adds on a margin.