Process Costing And WIP

Question 1

When can you not calculate unit costs by dividing total costs over output?
What must you convert WIP to?

Answer 1

When output started at the beginning of the period is not completed at the end

Equivalent units

Question 2

What are equivalent units?
How to we calculate incomplete units?
How to calculate equivalent units?

Answer 2

National units of complete production
WIP units x % completion
Complete units + (WIP x% completion)

Question 3

What may ending WIP consist of?
What must be done?
What must be incorporated?

Answer 3

Materials 100% complete and conversion costs only partially complete
Separate equivalent production calculations must be made for each element cost
Opening stock and existing WIP

Question 4

Valuation of opening and closing WIP
What must be made to determine unit costs for the period?
What are the 2 types?

Answer 4

Assumptions
Weighted average
First in first out

Question 5

Weighted average method
What do we assume? What can it no longer be?
When is WA used?

Answer 5

Assume WIP is merged with units introduced in the current period
Can no longer be identified separately
If each element of WIP is given

Question 6

FIFO
What is opening WIP?
When do you use fifo?

Answer 6

The first to be processed and completed during the current month
When % completion is given of each element of opening WIP