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Cost

The document outlines the Weighted-Average and FIFO methods for calculating equivalent units of production and assigning costs in inventory management. It details the steps involved in computing equivalent units, cost per equivalent unit, and preparing a cost reconciliation report. The process includes assessing costs for beginning and ending work-in-progress (WIP) inventory and units transferred out.

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Jasmin Medrano
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11 views3 pages

Cost

The document outlines the Weighted-Average and FIFO methods for calculating equivalent units of production and assigning costs in inventory management. It details the steps involved in computing equivalent units, cost per equivalent unit, and preparing a cost reconciliation report. The process includes assessing costs for beginning and ending work-in-progress (WIP) inventory and units transferred out.

Uploaded by

Jasmin Medrano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Weighted-Average Method inventory (a) x (b)

Units completed and transferred out


Step 1. Compute the Equivalents units of
Units transferred to
Production the next dept. (a)
Department Materia Conve Cost per equivalent
ls rsion unit (b)
Units transferred to the next Cost of units
department transferred out (a) x (b)
Equivalents units in ending WIP
Inventory:
Materials: Units x
(percent complete)
Conversion: Units x
(percent complete)
Equivalents units of Step 4. Prepare a Cost Reconciliation Report
Production
Cost to be accounted for:
Cost of beg. WIP inventory
Step 2. Compute the Cost per Equivalent Unit Costs added to production during the
Materi Conver period
als sion Total cost to be accounted for
Cost of beg. WIP inventory Cost accounted for:
Cost added during the period Cost of ending WIP inventory
Total cost (a) Costs of units transferred out
Equivalent units of production (b) Total cost accounted for
Cost per Equivalent Unit (a/b)

Step 3. Assign Cost to Units


Materi Conve Total
als rsion
Ending WIP Inventory:
Equivalent Units (a)
Cost per equivalent
unit (b)
Cost of ending WIP
Step 2. Compute the Cost per Equivalent Unit
Materi Conver
als sion
Cost added during the period (a)
Equivalent units of production (b)
Cost per Equivalent Unit (a/b)

FIFO METHOD
Step 1. Compute the Equivalents units of
Production
Mate Conve
rials rsion
Equivalent units needed to
complete beg. WIP inventory:
Materials: Units x (100% -
percent completed)
Conversion: Units x (100%
- percent completed) Step 3. Assign Cost to Units
Equivalent started and completed
during the period(less the beg.) Mate Conve Total
Equivalent units in ending WIP rials rsion
inventory: Ending WIP Inventory:
Materials: Units x (percent Equivalent Units in ending
completed) WIP inventory(a)
Conversion: Units x Cost per equivalent unit
(1percent completed) (b)
Equivalent units of production Cost of ending WIP
inventory (a) x (b)
Units transferred out:
Cost in beg. WIP
inventory:
Cost to complete the units in WIP inventory
Equivalent Units needed to
complete beg, (a)
Cost per equivalent unit
(b)
Cost to complete in beg.
WIP inventory(a)x(b)
Cost of units started and completed this period:
Units started and
completed (a)
Cost per equivalent unit
(b)
Cost of units started and
completed (a)x(b)
Total cost of units transferred out:

Step 4. Prepare a Cost Reconciliation Report


Cost to be accounted for:
Cost of beg. WIP inventory
Costs added to production during the
period
Total cost to be accounted for
Cost accounted for:
Cost of ending WIP inventory
Costs of units transferred out
Total cost accounted for

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