Process Costing

Explain the accounting differences in process costing versus job-order costing and answer the following questions:

• How are manufacturing costs accounted for in process costing?
• How are labor and overhead costs applied in a process costing system?
• Why is the cost per equivalent unit determined separately for direct materials and for conversion costs?
• What is the reason for determining the cost per equivalent unit?
• What is the most important purpose of the cost of production report?
• Are there different ways of determining the cost of completed and transferred out units, and the cost of ending work in process inventory?

Additionally, provide an example of a product environment most suitable to employ a process-costing system.