*Please see very bottom for my question* Question Ex Company produces a single product. Material A is added at the start of the production process and packaging material B is added at the end of the process. Conversion costs are incurred uniformly throughout the process. Production data for 2007 was as follows: Beginning work-in-process inventory (60% complete in conversion) 1,000 units Units started 17,000 units Units completed ? Ending work-in-process inventory (50% complete in conversion) 2,000 units Using a first-in, first-out (FIFO) process costing system, the equivalent units in 2007 for Material A are I can't figure out how to find the answer. I tried $18000 and $16000 but it is incorrect check_circle Expert Answer thumb_up thumb_down Step 1 Equivalent Units of Production are the amount of units manufactured in the current period to which the expenditure, i.e. costs incurred in the same period are allocated for calculation of per unit product cost. Step 2 The equivalent units in 2007 for Material A Particulars Units Units Transferred 16,000 Ending Work in progress inventory (2,000 x 50%) 1,000 Equivalent Units of production 17,000 Opening WIP inventory is not considered in calculation of equivalent units of production because material A is added in start of production and Opening WIP is already 60% completed. Units transferred===Units started+Beginning WIP−Closing WIP17,000+1,000−2,00016,000Units transferred=Units started+Beginning WIP-Closing WIP=17,000+1,000-2,000=16,000 Hello: *I am stuck on the middle portion (2000 * 50%). Was the Ending WIP Inventory multiplied by 1 minus the conversion rate %? Or was it simply multiplied by the conversion rate? I know that in this case since it is 50% it does not matter but I need to clarify for other problems where the conversion rate will not be 50% for End. WIP. Thank you
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Ex Company produces a single product. Material A is added at the start of the production process and packaging material B is added at the end of the process. Conversion costs are incurred uniformly throughout the process. Production data for 2007 was as follows:
Beginning work-in-process inventory (60% complete in conversion) 1,000 units
Units started 17,000 units
Units completed ?
Ending work-in-process inventory (50% complete in conversion) 2,000 units
Using a first-in, first-out (FIFO)
I can't figure out how to find the answer. I tried $18000 and $16000 but it is incorrect
Expert Answer
Equivalent Units of Production are the amount of units manufactured in the current period to which the expenditure, i.e. costs incurred in the same period are allocated for calculation of per unit product cost.
The equivalent units in 2007 for Material A
| Particulars | Units |
| Units Transferred | 16,000 |
|
Ending Work in progress inventory (2,000 x 50%) |
1,000 |
| Equivalent Units of production | 17,000 |
Opening WIP inventory is not considered in calculation of equivalent units of production because material A is added in start of production and Opening WIP is already 60% completed.
Units transferred===Units started+Beginning WIP−Closing WIP17,000+1,000−2,00016,000Units transferred=Units started+Beginning WIP-Closing WIP=17,000+1,000-2,000=16,000
Hello:
*I am stuck on the middle portion (2000 * 50%). Was the Ending WIP Inventory multiplied by 1 minus the conversion rate %? Or was it simply multiplied by the conversion rate? I know that in this case since it is 50% it does not matter but I need to clarify for other problems where the conversion rate will not be 50% for End. WIP.
Thank you
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