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Hi John,
A question from the Mock/Revision exam:
‘Process B had no opening stock. 13,500 units of raw material was transferred in at £4,50 per unit. Additional material at £1.25 per unit was added in the process. Labour and overheads were £6.25 per completed unit and £2.50 per unit incomplete.
If 11,750 completed units were transferred out, what was the value of the closing WIP in process B?’
The answer is saying that i should have valued the closing WIP= 1,750 * (£.4.50+£1.25+£2.50= £14,437
My question is why do we not include the ‘Lab and Oheads £6.25 per unit complete’ in that calculation?
By definition, the work-in-progress is not complete. $6.25 is the labour and overheads for completed units. For incomplete units the cost is only $2.50 as per the question.
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