- This topic has 4 replies, 4 voices, and was last updated 14 years ago by
.
- Posts
I’m having trouble with question 9 of the Chapter 8 Test in the Open Tuition notes. I just can’t see how they got to the answer D.
I work out total equivalent units to be 15,700.
Opening WIP: 800
Completed units: 14, 000
Closing WIP: 900
Cost per unit: (51,000 + 193,170)/15,700 = $15.55 per unit.
Value of Closing WIP: 15.55 x 3000 x 30% = 13,995 which is wrong.
Or 15.55 x 3000 = 46,650 which is still wrong.
If anyone can help me out here I’d really appreciate it. Thanks.You have to work out the equivalent using for materials and conversion costs separately.
The question says that all materials are input at the commencement of the process, and so it is only conversion costs that are 60% or 30% completed.
It also says they are using the FIFO method.The equivalent units for materials is 15000 so the material cost per unit is 51000/15000 = $3.40.
The equivalent units for conversion costs is 13700 so the conversion cost per unit is 193170/13700 = $14.10So…the value of the closing WIP is (3000 x 3.40) + (3000 x 30% x 14.10) = $22890
You are a star John, thank you.
I assumed that the % of completion was for both material and conversion costs, I didn’t realise the subtle clue in the phrase “All materials are input at the commencement of the process”.
Sideline, 13700 is worked out by:
First find Units started and finished in the period: 14,000 – 2,000 (opening WIP) = 12,000With regards to conversion costs:
Opening WIP equivalent units: (1-60%)x2000 = 800
Units started & finished equivalent units: 12,000
Closing WIP equivalent units: 30% x 3000 = 900800+12,000+900 = 13,700.
- Topics: 0
- Replies: 1
- ☆
Thank you John, I was having so much trouble with this question also, it was hurting my head.
- You must be logged in to reply to this topic.