| Conversion cost | Direct labor cost plus manufacturing overhead cost.
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| 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 one could obtain from the materials and effort contained in partially completed units.
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| 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.
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| FIFO method | A method of accounting for cost flows in a process costing system in which equivalent units and unit costs relate only to work done during the current period.
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| Operation costing | A hybrid costing system used when products have some common characteristics and some individual characteristics.
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| Process costing | A costing method used when essentially homogeneous products are produced on a continuous basis.
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| Processing department | An organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product.
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| Weighted-average method | A method of process costing that blends together units and costs from both the current and prior periods.
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