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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

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

Equivalent units of production: average cost method

The following information concerns production in the Finishing Department for May. The Finishing Deportment uses the average cost method.

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a. Determine the number of units in work in process inventory at the end of the month.

b. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for May.

(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.

To Determine: The ending work – in process inventory units during the month of May.

Explanation

Calculate the ending work – in process inventory units during the month of May as shown below:

Particulars Units
Units in process, May 1 4,200
Add: Units produced during the period 23,600
Less: Units finished during the period ...

(b)

To determine
The number of equivalent units for production for the period of May.

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