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Sir:
Test question 7 in Opentuition Notes:Process B had no opening stock. 13,500 units of raw material were transferred in at 4.50 per unit. Additional material at 1.25 per unit were added in 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 closing stock in process B?
Why isn’t the $6.25 a factor in the calculations? I understand the 4.25 and the 1.25. How does the 2.50 factor in as well?
Thanks
Carol
The closing stock is incomplete (otherwise it would have been transferred out) and therefore the labour and overheads are values at 2.50. The 6.25 only applies to completed units.
(I assume you have watched the lectures on process costing (otherwise, of course, there would be no point in looking at the notes))
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