Cost of production report

The cost of production report summarises a department's physical unit flows, equivalent units, cost per equivalent unit and cost assignment between transferred-out units and ending work-in-progress; it is the key document in process.

ByHoang TruongUpdated July 3, 2026

FrameworkProcess costing

See it move

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The cost of production report works through four steps: reconcile physical units so units in equal units out; convert units to equivalent units for their stage of completion; divide total costs to account for by equivalent units to get cost per equivalent unit; then multiply that rate by units transferred out and by equivalent units in closing work-in-progress to assign the total cost.

Where it fits

SubjectCost AccountingCoreTopicJob & Process CostingCore

The formula

LaTeX

EUP = U_{\text{out}} + U_{\text{WIP}} \times c

Variables

$E U P$: Total equivalent units of production for the period (calculated separately for materials and conversion where completion fractions differ) (equivalent units)
$U_{o} u t$: Physical units transferred out to the next department or finished goods during the period (units)
$U_{W} I P$: Physical units in closing work-in-progress at period end (units)
$c$: Completion fraction of closing WIP for the cost component in question (decimal (0 to 1))

Under the weighted-average method, opening WIP costs are pooled with current period costs and EUP ignores the stage of completion of opening WIP.

LaTeX

\text{Cost per EUP} = \dfrac{\text{Total costs}}{EUP}

Variables

$T o t a l cos t s$: Opening WIP cost balance plus costs added in the current period (weighted-average method) (€)
$E U P$: Total equivalent units of production calculated in the first formula (equivalent units)

Multiplied by equivalent units in transferred-out and closing WIP respectively to assign total departmental costs in the final section of the report.

Check yourself

PracticeCORE

A paint manufacturer uses process costing. A cost accountant is preparing the cost of production report for the mixing department for the month of June. Which of the following most accurately describes what this document achieves?

Select an answer to check your understanding.