CHAPTER 6 Process Costing After completing this chapter, you should be able to answer the following questions: How is process costing different from job order costing? Why are equivalent units of production used in process costing? | CHAPTER Process Costing 6 LEARNING OBJECTIVES Ater completing this chapter you should be able to answer the following questions 0 How is process costing different from job order costing s Why are equivalent units of production used in process costing 0 How are equivalent units of production determined using the weighted average and FIFO methods of process costing s How are unit costs and inventory values determined using the weighted average and FIFO methods of process costing 5 How can standard costs be used in a process costing system 6 Why would a company use a hybrid costing system Appendix What alternative methods can be used to calculate equivalent units of production INTRODUCING Lumina Candles Art Kelly Borsheim started Lumina Candles Art a home-based business located in Cedar Creek Texas in the early 1990s. While working for a photo lab in college in the 1980s Kelly had supplemented her income by selling fine art photography and shooting occasional wedding jobs. This led to an abiding interest in art and she would later attend art school. A friend Jamshid gave Kelly a beeswax honeycomb candle that she still has. Kelly decided to find out what it took to make one. She started making and selling only a few natural candles later adding colors a few at a time to test the market. Even though she was still working 60 hours a week at the photo lab Kelly continued to develop the candle and art business. She left the photo industry in 1995 and in the following year another friend Mark showed Kelly how http lumina the Internet worked. He also gave her a basic HTML lesson along with a list of sources for teaching herself how to do more. In May 1996 she launched her Web site. Although she still sells beeswax candles via local shows she now relies mainly on the Internet for customers. In making candles Lumina uses two different processes. One process is used to make hand-rolled 100 percent beeswax candles and the other process is used to .
