Definition of cost of production report

summary of the total manufacturing cost of an item. It involves charges to a processing department and the allocation of the total cost between the ending work-in-process inventory and the units completed and transferred out to he next department or finished goods inventory. The cost of production report generally consists of four sections: (1)Physical Flowaccounts for the physical flow of units in and out of a department. (2) Equivalent Productionis the sum of: (a) units in process, restated in completed units, and (b) total units actually produced. The computation of equivalent units of production depends on the flow of cost method-weighted average or FIFO. (3) Costs to Account Foraccounts for the incurrence of costs that were: (a) in process at the beginning of the period, (b) transferred in from previous departments, and (c) added by the department during the current period. (4) Costs Accounted Foraccounts for the disposition of costs charged to the department that were: (a) transferred out to the next department or finished goods inventory, (b) completed and on hand, and (c) in process at the end of the period. The total of the Costs to Account Formust equal the total of the Costs Accounted For. process costing