ECONOMICS

Detailed explanation-1: -When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and total manufacturing. The total manufacturing cost per unit is used in costing the units completed and transferred-out during the period.

Detailed explanation-2: -The total cost assigned to units transferred out equals the cost per equivalent unit times the number of equivalent units.

Detailed explanation-3: -What is Total Manufacturing Cost? Total manufacturing cost is the aggregate amount of cost incurred by a business on its production operations within a reporting period. It includes all possible costs incurred by the production function, including direct materials, direct labor, and factory overhead.

Detailed explanation-4: -Answer and Explanation: A measure of the work done during a production period expressed in terms of fully complete units of output is called the equivalent units. The concept is used in process costing to determine the number of units that must be used to calculate the per-unit manufacturing cost for the period.

Detailed explanation-5: -To calculate total manufacturing cost you add together three different cost categories: the costs of direct materials, direct labour and manufacturing overheads. Expressed as a formula, that’s: Total manufacturing cost = Direct materials + Direct labour + Manufacturing overheads.