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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Costs per equivalent unit and production costs

Based on the data in Exercise 20-14, determine the following:

a. Cost of beginning work in process inventory completed in November

b. Cost of units transferred to the next department during November

c. Cost of ending work in process inventory on November 30

d. Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process

e. The November increase or decrea.se in costs per equivalent unit for direct materials and conversion from the previous month

(a)

To determine

Process costs

It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.

Equivalents units for production

The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.

Cost per unit

Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost.

(a)

To Determine: The costs of beginning work in process inventory completed in November.

Explanation

Calculate costs of beginning work in process inventory completed in November as shown below:

Particulars Units (A) Per unit (B) Amount (A × B)
Beginning work in process balance $10,566
Add: Conversion costs incurred during the period

(b)

To determine
The cost of units transferred to the next department during November.

(c)

To determine
The cost of ending work in process inventory on November 30.

(d)

To determine
The cost per equivalent unit for direct materials and conversion costs including beginning inventory.

(e)

To determine
The equivalent cost per unit increase or decrease comparing current month to previous month.

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