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A company operates a process costing system using the first in first out method of valuation. No losses occur in the process. All materials are input at the commencement of the process. Conversion costs are incurred evenly through the process. The following data relate to last period:
Units Degree of completion
Opening work in progress 2000 60%
Total number of units completed 14000
Closing work in progress 3000 30%Cost arising
Materials $51000
Conversion $193170Can I see a calculation for closing work in progress please?
Material cost: $51,000
Equivalent units for materials: 17,000
Materials cost per unit = 51000/17000 = $3.Conversion cost: $193,170
Equivalent units: (40% x 2,000) + (14,000 – 2,000) + (30% x 3,000) = 13,700
Conversion cost per unit = 193170 / 13700 = $14Closing WIP:
Materials: 3,000 x $3 = 9,000
Conversion: 3,000 x 30% x $14 = 12,600
Total: $21,600
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