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degree of completion units cost
opening wip 40% 3000 6750
Direct material cost 5000 10000
conversion cost 19925
closing wip 75% 2000
materials are added gradually throughout the production process. no loss in the process.
what is the cost of the finished output in the month if the FiFO method of stock valuation is used?Please do not use this forum to simply set test questions and expect an answer.
You must have an answer in the same book in which you found the question, and so you should ask about which part of the answer you are not understanding.The number of units completed from start to finish are 3,000 + 5,000 – 2,000 = 6,000
Therefore the number of effective units is (60% x 3,000) + 6,000 + (75% x 2,000) = 9,300.
Therefore the cost per unit is (10,000 + 19,925) / 9,300 = 3.21774
Therefore the cost of the finished output = 6,750 + (3,000 x 60% x 3.21774) + (6,000 x 3.21774) = 31,848
Have you watched my free lectures on process costing? The free lectures are a complete course for Paper F2 and cover everything needed to be able to pass the exam well.
sir I was unable to understand the sentence,,, Materials are added gradually throughout the production process.
the cost per unit is 4.75.
Therefore the cost of the finished output=6750+(3000*.6*4.75)+(3000*4.75)=29550.
we are using FIFO method
The number of units completed from start to finish are 3,000 + 5,000 – 2,000 = 6,000-3000=3000.sir please make it confirm weather i am doing the right way or not?
If they are added gradually then it means that if the units are (for example) 40% finished, then they will have 40% of the materials.
The number of units completed from start to finish is not 3,000 – it is 6,000 as I wrote in my previous reply.
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