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Hi Sir,
Please can you help me with the following question:
A company uses process costing to establish the cost per unit of its output.
The following information was available for the last month:Input units 10,000
Output units 9,850
Opening inventory 300 units, 100% complete for materials
and 70% complete for conversion costs
Closing inventory 450 units, 100% complete for materials
and 30% complete for conversion costsThe company uses weighted average method of valuing inventory.
What were the equivalent units for conversion costs?
A 9,505 units
B 9,715 units
C 9,775 units
D 9,985 unitsBPP shows the answer is D. I think it’s C as we need to minus the opening inventory (300*70%) as it’s not produced during this process.
Many Thanks
The BPP answer is correct.
When using the weighted average method we bring in all of the opening inventory of 300 units.
This is all explained in my free lectures on process costing. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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