COST ACCOUNTING
PROCESS COSTING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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RM45, 000
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RM55, 000
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RM75, 000
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RM100, 000
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Detailed explanation-1: -Largo Company has unit costs of $10 for materials and $30 for conversion costs. If there are 2, 500 units in ending work in process, 40% complete as to conversion costs and fully complete as to materials cost, the total cost assignable to the ending work in process inventory is: a. $45, 000.
Detailed explanation-2: -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.
Detailed explanation-3: -Equivalent units are notional whole units that are equivalent to the number of incomplete units adjusted for their stage of completion. For example, if there are 200 incomplete units in a process at the end of a period and they are 75% complete then this is equivalent to 150 (200 × 0.75) whole (complete) units.
Detailed explanation-4: -Answer and Explanation: The cost per equivalent unit is often determined separately for direct materials and conversion costs because these costs are typically incurred at different stages of the production process.