Part 1
Discuss the two alternatives for product costing systems. Be sure to address the following:
- How do the two systems differ?
- What are the characteristics of the companies that would use each?
- Describe the three valuation method alternatives.
- Explain why Washburn Guitar uses job-order costing and the costs Washburn tracks.
Part 2
Regarding process costing, discuss the following:
- How do the weighted-average and first-in, first-out methods of process costing differ in their treatment of beginning Work in Process Inventory units?
- What is an "equivalent unit of production," and why is it a necessary concept to employ in a process costing system?
- Explain why BP uses process costing.
- Why does BP not use EUPs or maintain a Work in Process Inventory?