Question

what are the two cost categories for equivalent units of production?

What are the 2 methods of calculating equivalent units of production?

How do we calculate the equivalent units of production under the weighted average method?

Given the following what is the equivalent units of production for ending inventory

transferred out 21000 units

ending inventory 900 units 80%( material) 20%( conversion)

If the costs for beginning inventory was $28,000 for materials, What is the cost per unit for material?

Answer 1

Answer :- The three cost categories of equivalent units of production are as follows :-

1. Direct Material Cost

2. Direct Labour Cost

3. Manufacturing overhead

Answer:- The two methods in calculating Equivalent units of production are as follows :-

1. First-in-First-Out (FIFO) Method

2. Weighted Average Method

Answer:- Calculation of Equivalent units under weighted average method is as follows:-

Equivalent units = Number of partially completed units × percentage of completion

This weighted average method is mainly used to calculate equivalent units of production. This method combines units and costs from the current period with units and costs from the prior period. Using this method, the equivalent units of production are the number of units transferred to the next department of finished gods plus the equivalent units in the departments Ending work in process inventory.

Answer:- Calculation of Equivalent units of production :-

Ending Inventory transferred out = 21000 units

Ending inventory of direct material = 720 units (900 units × 80%)

Ending inventory of Conversion = 180 units (900 units × 20%)

Equivalent units of production = 21000 + 720 + 180 = 21900 units

Calculation of cost per unit of material = production cost / Equivalent units

= $28000/21900 units = $1.278 per unit of material