What are the steps of process costing?

1. Identify the process: The first step in process costing is to identify the specific process or processes that will be used to produce the product or service.

2. Calculate the total cost of production: This involves determining all the costs associated with the production process, including direct materials, direct labor, and overhead costs.

3. Determine the total number of units produced: The next step is to determine the total number of units produced during the production process.

4. Calculate the cost per unit: To calculate the cost per unit, divide the total cost of production by the total number of units produced.

5. Allocate costs to units: Once the cost per unit has been calculated, the next step is to allocate these costs to each individual unit produced.

6. Calculate the cost of ending work in process: If there are any units that are still in process at the end of the accounting period, the cost of these units must be calculated and included in the total cost of production.

7. Calculate the cost of goods sold: Finally, the cost of goods sold can be calculated by subtracting the cost of ending work in process from the total cost of production.

8. Prepare financial statements: The final step in process costing is to prepare financial statements, including income statements and balance sheets, that reflect the costs associated with the production process.