ECONOMICS

Detailed explanation-1: -The flow of costs in a process costing system requires that materials be added in one department, labor added in another department and manufacturing overhead in a third department. The total manufacturing cost per unit is used in costing the units completed and transferred 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: -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.

Detailed explanation-4: -Total manufacturing costs showcase how much your company spent to produce its inventory in a given period of time. This includes a thorough account of the cost of overhead, materials used, labor, and any other manufacturing expenses that contributed to completing the product.

Detailed explanation-5: -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.