COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Equivalent units of beginning work in process + units completed and transferred out
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Equivalent units of beginning work in process + equivalent units of ending work in process
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Units completed and transferred out + equivalent units of ending work in process
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Units completed and transferred out + equivalent units of beginning work in process
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Detailed explanation-1: -Equivalent units = Number of physical units × Percentage of completion. For direct materials, 3, 000 equivalent units = 5, 000 physical units × 60 percent complete; for direct labor and overhead, 1, 500 equivalent units = 5, 000 physical units × 30 percent complete.
Detailed explanation-2: -Equivalent Units of Production = Units transferred out + Equivalent units in ending work in process inventory − Equivalent units in beginning inventory.
Detailed explanation-3: -In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers: Current costs plus cost of beginning work-in-process inventory.
Detailed explanation-4: -To simply calculate equivalent units, you can multiply the number of physical items by the percentage of the work done on them. For two items that are 50% done, you would have one equivalent unit (2 x 50% = 1). When the items are completely finished, the number of equivalent units is equal to the physical items.