To correctly allocate costs to products within a continuous production environment, we are required to cost both the units completed and the partially complete units still in Work in Process (WIP). To achieve this, we use the concept of equivalent units: Calculate the equivalent complete units based on the level of completion of the partially complete WIP. Complete the following: A company had 1997 units in opening WIP and started 19886 during the month and completed 13850 units and the closing WIP units were 100% complete in relation to Direct Materials (DM) and 52% complete in relation to Conversion Costs (CONV). The company's costs (including opening WIP and Incurred during the month were: DM costs $116054 and CONV costs $51305. Calculate the TOTAL (i.e. including both completed and closing WIP) equivalent units for this month IN RELATION TO CONVERSION?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
To correctly allocate costs to products within a continuous production environment, we are required to cost both the units completed and the partially complete units still in Work in Process (WIP). To achieve this, we use the concept of equivalent units: Calculate the equivalent complete units based on the level of completion of the partially complete WIP.
Complete the following:
A company had 1997 units in opening WIP and started 19886 during the month and completed 13850 units and the closing WIP units were 100% complete in relation to Direct Materials (DM) and 52% complete in relation to Conversion Costs (CONV).
The company's costs (including opening WIP and Incurred during the month were:
DM costs $116054 and CONV costs $51305.
Calculate the TOTAL (i.e. including both completed and closing WIP) equivalent units for this month IN RELATION TO CONVERSION?
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