1. avatar says

    where did the $0.83 come from when you were valuing closing WIP? i thought the cost per unit for materials was $1.38

    Also, i don’t understand why you computed the value of materials only when finding the cost of the 25000 units made this month.How come conversion costs aren’t calculated?

    • Profile photo of John Moffat says

      The cost per unit for materials is not $1.38 at all, and conversion costs were calculated when valuing the completed units!!!

      Because of the different stages of completion we have to calculate the cost per unit for materials and the cost per unit for conversion costs (labour + overheads) separately, and I go through the workings of both of these in the lecture. Materials is $0.83 per equivalent unit, and conversion costs are $0.55 per equivalent unit. The total of the two ($1.38) is the full cost this period of a finished unit.

      Are you sure you watched the whole lecture?

      I do suggest that you watch it again carefully. Maybe it will help you if you have the answer at the back of the lecture notes in from of you while you watch it.

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