COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The beginning inventory percentage complete is used only for conversion costs
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The beginning inventory percentage complete is used for both material and conversion costs
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The beginning inventory amount is not accounted for
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The beginning inventory amount is used in total
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Detailed explanation-1: -Equivalent units = number of physical units × percentage of completion. Units completed and transferred out are 100 percent complete. Thus equivalent units are the same as the physical units. Equivalent units = number of physical units × percentage of completion.
Detailed explanation-2: -How to calculate inventory weighted average cost. To calculate the weighted average cost, divide the total cost of goods purchased by the number of units available for sale. To find the cost of goods available for sale, you’ll need the total amount of beginning inventory and recent purchases.
Detailed explanation-3: -When using the weighted average method, you divide the cost of goods available for sale by the number of units available for sale, which yields the weighted-average cost per unit. In this calculation, the cost of goods available for sale is the sum of beginning inventory and net purchases.
Detailed explanation-4: -Equivalent units is a cost accounting concept that is used in process costing for cost calculations. It has no relevance from an operational perspective, nor is it useful for any other type of cost derivation other than process costing.