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Hello sir.. please help me in solving the following question.. i tried to do it but got the wrong answer. Part of my workings is included.. i do not know if im doing it right and at which amount to value the units..
A company which operates a process costing system had work in progress at start of last month of 300 units(valued at $1710) which were 60% complete in respect of all costs. last month a total of 2000 units were completed and transferred to finished goods warehouse. the cost per equivalence unit for costs arising last month were $10. The company uses the FIFO method.
What is the total cost of the 2000 units transferred to finished goods?
Opening WIP 300(60% complete) $1710
No of completed units 2000no of units started and completed during the month = 2000 – 300
=1700Since you know that the cost per equivalent unit is $10, the 1700 started and completed will be valued at $10 each. The other 300 that were completed (but had already been started) will be valued at $1710 (the amount already spent) plus 40% x $10 per unit (the cost of finishing them).
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