| Conversion Cost | Direct labor cost plus manufacturing overhead cost. |
| Equivalent units | The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units. |
| Equivalent units of production (weighted-average method) | The units transferred to the next department (or to finished goods) during the period plus the equivalent units in the department’s ending work in process inventory |
| FIFO method | A process costing method in which equivalent units and unit costs relate only to work done during the current period. |
| Operation costing | A hybrid costing system used when products have some common characteristics and some individual characteristics. |
| Process costing | A costing method used when essentially homogeneous products are produced on a continuous basis. |
| Processing department | An organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product. |
| Weighted-average method | A process costing method that blends together units and costs from both the current and prior periods. |
