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Lecture, chapter 25, part b
I don’t understand how
$9000 from 60% of 15000
units is used for overheads
when its opening inventory.
Are we not supposed to use
finished goods inventory to
find the cost per unit but
you used opening stock to
calculate cost per unit
instead of 40%. please
explain.Chapter 25 of our free lecture notes is nothing to do with Process Costing!
I assume that you are asking about example 2 in Chapter 13?
If so, then because it is first-in-first-out, the first work done has to be to finish off the 15,000 units that were already work-in-progress at the start of the month. Since they were already 40% complete for overheads, there was only 60% of the work left to be done during the month. 60% work on 15,000 units is equivalent to doing full work on 9,000 units.
I do suggest that you watch the free lecture again.
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