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thank you for your help I really appreciate it.
at the start of the month there were 2000 units of work in progress in a factory. during the month 12000 units were started and the end of the month 3000 were in closing work in progress the degree of completion of opening work in progress was 70 percent and closing work in progress was 20 percent complete.
how many equivalent units of production were achieved during the month in FIFO were used.
I had grasped fully how to arrive the finished units and the units started and finished during the month and have used T account to sort out the question. where I got it wrong was I have valued the Closing inventory by the remaining 80 percent which in doing so I have arrived 80percent * 3000 equals 2400 where as the book answer for the valuation of closing inventory is 20 percent of 3000 equals 600.
My Question is Should we value the closing inventory by what ever percent given in the question always. I have no problem with the opening work in progress. the opening work in progress will be valued at the remaining percent always.
Thank you very much for the assistance.If the closing inventory is only 20% finished then it means that only 20% work has been done on them in this period. Therefore this is equivalent to doing full work on 20% x 3,000 = 600 units.
Have you watched my free lectures on process costing? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
yes I did and understood well with the worked example. in the lecture example the closing inventory was valued at 50 percent which did not require a lot of thinking from me. but in this question I was not sure is it 20 per cent or 80 percent but I have understood it now. Thank you very much for your help.
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