Question

Process Costing typically follows five steps. The first step is to summarize the flow of the physical units. Select a manufacturing company or a product you are familiar with, identify the product, and describe how would you define the flow/movement of the physical units

Answer 1

Answer)

The product I select is wine.Wine manufacturer manufactures wine in large and homogeneous quantity.The manufacture cycle is harvesting,crusing,pressing grapes, fermentation,ageing,bottling,labeling,shipping.

Here if fermentation is completed it is assumed that 80%of work is completed and in general at the yet end there will be ending Inventory mostly in fermentation stage as without fermentation there will be no wine proceeding.

Here the flow of the physical units starts with identifying the opening stock at different stages like pressing stage, fermentation stage,labelling stage and units ready for shipping.Then starting new units for production. Recording that units ready for shipping.Then seeing the work in process I'm at different stages at the year end.