Production Cost Calculation: A Step-by-Step Analysis
Classified in Mathematics
Written on in English with a size of 4.72 KB
This document outlines the steps to calculate production costs, including equivalent units and costs for work-in-progress (WIP) and finished goods.
Step 1 - Determine the units of product to account for (how much inventory do we need to track?) | |||||
Units in beginning WIP | 30,000 | ||||
+ Units started this period | 155,000 | ||||
= Total units to account for | 185,000 | ||||
Step 2 - Determine the number of units of product accounted for (where is the inventory at the end of the month?) | |||||
Step 2 MUST equal Step 1 | |||||
Units in beginning WIP | 30,000 | ||||
+ Units started and completed during the period | 119,000 | 149,000 finished - 30,000 started last month = 119,000 started and finished this month | |||
+ Units in ending WIP | 36,000 | 30,000 Beg WIP + 155,000 started - 149,000 finished = 36,000 not finished | |||
= Total |