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  1. avatar says

    Hi, can anyone pls help me with this problem?

    A company operates a process costing system using the FIFO system of valuation. No losses occur in the process. The following data relates to last month:

    Opening work-in-progress: 200 units with a total value of $1530
    Input to the process: 1000
    Completed production: 1040

    Last month the cost per equivalent unit of production was $20 and te degree of completion of work-in-progress was 40% thoughout the month.

    What was the value(at cost) of last month’s closing work-in-progress?

    a) $1224
    b) $1280
    c) $1836
    d) $1920

    My ans was D and my workings as follows:

    WIP (c/f): (1000+200)-1040 = 160units
    Value: 160×0.6x$20 = $1920

    However, the actual ans was B because they used 0.4 instead of 0.6. As such, I would like to know why is it that they used 0.4 for the valuation instead?

    Thanks!

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