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21 A company which operates a process costing system had work-in-progress at the start of last month of 300 units (valued at $1,710) which were 60% complete in respect of all costs. Last month a total of 2,000 units were completed and transferred to the finished goods warehouse. The cost per equivalent unit for costs arising last month was $10. The company uses the FIFO method of cost allocation.
What was the total value of the 2,000 units transferred to the finished goods warehouse last month?
$19,910
$20,000
$20,510
$21,710
The correct answer is: $19,910
$
Opening WIP
1,710
Completion of 300 units (300 x 40% x 10)
1,200
1,700 units @ $10 Total value 2,000 units
17,000
19.910
HELLO SIR
I couldn’t understand why are we using 1710 when its mentioned in the question 60 percent complete in terms of cost so we should have taken 60/ 100 ×1710= 1026 & how do we know that 40 percent is complete with respect to
Your feedback would be really helpful
THANK YOU.1,170 is the cost of the 60% work that was done last month and that would have been done at last months prices.
This month they did the remaining 30% of the work and that would be at this months prices.
Please do watch my free lectures on process costing because I do explain all of this, with examples.
Sir Ur lectures are helpful , if LIFO was used it would still be the same answer since there is no issue
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