Questions:
1. In a process costing system, how are normal and abnormal spoilage typically treated? Why are normal and abnormal spoilage treated differently?
2. What are the characteristics of a company that would be more likely to use process costing than job order costing?
3. 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?
4. What is an "equivalent unit of production," and why is it a necessary concept to employ in a process costing system?
5. Is one equivalent unit computation sufficient for all cost components? Explain your answer.