Find out the cost per unit, Cost Accounting

Find Out the Cost per Unit

Material A is added at the start of a production process. Overheads and Labor are added continuously throughout the production process. At the ending of the process, 10,000 units were complete and 2,000 units were 60 percent complete as per overheads and labor.  The cost of raw materials employed throughout the period amounted to shs.220, 000, labour shs.150, 000 and overheads shs.74, 000.  There was no opening inventory.

Required 

Find out the cost per unit of both the completed units, and the units in the end inventory.

Solution

 

 

Physical Units

 

Materials

Conversion (direct Labour and overheads

Completed

10,000

  10,000

  10,000

Ending Inventory

  2,000

    2,000

   1, 200

 

12,000

______

_______

Equivalent Units

 

  12,000

  11,200

Cost for the Period

 

220,000

224,000

Cost per Equivalent Unit:

Shs.18.33

220,000/1,200=sh18.33    224,000/11,200=sh20

Total Cost/Equivalent Unit

=18.33+sh.38.33

 

 






In the above illustrations, there is no opening work in process.  When it exists, we need to adopt a method of valuing it and incorporating it into the process accounts.

Posted Date: 2/7/2013 2:36:54 AM | Location : United States







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