ECONOMICS

COST ACCOUNTING

PROCESS COSTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

If 150, 000 units are started into production there was no beginning work in process, and 50, 000 units are in process at the end of the period, how many units were completed and transferred out?

A	150, 000.
B	50, 000.
C	100, 000.
D	200, 000.

Explanation:

Detailed explanation-1: -If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-in-Process Inventory, then the units transferred out are: more than the units started during the period.

Detailed explanation-2: -WIP refers to the raw materials, labor, and overhead costs incurred for products that are at various stages of the production process. WIP is a component of the inventory asset account on the balance sheet. These costs are subsequently transferred to the finished goods account and eventually to the cost of sales.

Detailed explanation-3: -The cost per equivalent unit under the FIFO method of process costing is equal to the cost of beginning work in process inventory plus the costs added during the period, all divided by the equivalent units of production for the period.

Detailed explanation-4: -Equivalent units. are calculated by multiplying the number of physical (or actual) units on hand by the percentage of completion of the units. If the physical units are 100 percent complete, equivalent units will be the same as the physical units.

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