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Please explain:
WIP in a continuous manufacturing process was over estimated, what effect would correction of the error have in the period on the following:
1) cost per equivalent unit
2) total cost of output completedSince the WIP is overestimated, therefore:
Before the correction;
WIP increases, cost per EU decreases (because there are lot of WIP in there, so the total cost divides by EU will give you less amount of cost per EU), thus, total cost of output decreasesCorrection;
WIP decreases, cost per EU increases, thus, total cost of output increases
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