In the process costing method, what is the first step?

In process costing, summing up the flow of physical units is crucial as it lays the groundwork for understanding how many units are in the process during a specific accounting period. This step involves tracking the number of units that are started, completed, and still in process, ensuring that the costs can later be accurately assigned based on this flow.

Understanding the flow of physical units is essential because it determines the number of units that will be considered when calculating equivalent units and assigning costs. By having a clear picture of how many units have been produced and how many are still in-progress, accounting for costs related to these units can be conducted in subsequent steps. This systematic approach ensures that all aspects of the unit flow are accounted for before diving into the more complex aspects of cost calculation and assignment.

Subsequent steps, such as computing equivalent units and assigning costs to completed units, rely on having this foundational summary of the physical units. Without it, the following calculations would lack the necessary context and accuracy.