The four steps necessary to complete a cost of production report in a process cost system are allocate costs to units transferred out and partially completed units determine the units to be assigned costs determine the cost per equivalent unit compute equivalent units of production

Step 1: Determine units to be assigned costs

Step 2: Compute equivalent units of production

Step 3: Determine the cost per equivalent unit.

Step 4: Allocate costs to units transferred out and partially completed units.

Explanation:

Step 1: Determine units to be assigned costs; this is done by measuring the costs per unit equivalent by taking the total costs (both starting work and costs added this period) and dividing by the total equivalent units.

Step 2: Compute equivalent units of production; An equivalent production unit is an indication of the amount of work done by a producer on output units which are partially completed at the end of an accounting period. This is done by multiplying the number of partially completed units by the percentage of completion.

Step 3: Determine the cost per equivalent unit; To measure costs per unit equivalent by taking the total costs (both starting work and costs added this period) and dividing by the total equivalent units.

Step 4: Allocate costs to units transferred out and partially completed units; this is calculated by multiplying the equivalent units calculated for units started and completed by the cost per equivalent unit for materials, labor and overhead.