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 2015 units in opening WIP and started 144840 during the month and completed 8784 units and the closing WIP units were 100% complete in relation to Direct Materials (DM) and 61% complete in relation to Conversion Costs (CONV). The company's costs (including opening WIP and Incurred during the month were: DM costs $100165 and CONV costs $53094. Calculate the COST of the closing WIP in relation to CONVERSION (ONLY) for this month? Note - only use WHOLE UNITS - by rounding if necessary
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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 2015 units in opening WIP and started 144840 during the month and completed 8784 units and the closing WIP units were 100% complete in relation to Direct Materials (DM) and 61% complete in relation to Conversion Costs (CONV).
The company's costs (including opening WIP and Incurred during the month were:
DM costs $100165 and CONV costs $53094.
Calculate the COST of the closing WIP in relation to CONVERSION (ONLY) for this month?
Note - only use WHOLE UNITS - by rounding if necessary
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