29 Explain and Compute tantamount Units and Total price of manufacturing in one Initial processing Stage

As described previously, process costing can have an ext than one job-related in process account. Determining the value of the job-related in process inventory account is an overwhelming because each product is at varying stages of completion and the computation demands to it is in done for each department. Do the efforts to identify the value of those partial stages of completion needs application that the identical unit computation. The equivalent unit computation determines the number of units if every is produced in its entirety before manufacturing the next unit. For example, forty units that space 25% finish would it is in ten (40 × 25%) systems that are entirely complete.

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Direct product is added in stages, such as the beginning, middle, or end of the process, when conversion prices are expensed evenly end the process. Regularly there is a different percentage of completion for products than there is because that labor. Because that example, if material is included at the beginning of the process, the forty units that are 100% complete with respect to material and also 25% finish with respect to conversion prices would be the exact same as forty systems of material and ten units (40 × 25%) completed with conversion costs.

For example, throughout the month the July, absent City Percussion purchased raw product inventory that $25,000 for the shaping department. Although every department tracks the straight material it supplies in its very own department, all material is hosted in the material storeroom. The inventory will certainly be requisitioned because that each department as needed.

During the month, rock City Percussion’s shaping department requested $10,179 in direct material and also started into production 8,700 hickory drumsticks of dimension 5A. There to be no start inventory in the shaping department, and 7,500 drumsticks were completed in that department and transferred to the finishing department. Hardwood is the only straight material in the shaping department, and it is added at the beginning of the process, therefore the work-related in process (WIP) is considered to it is in 100% complete with respect to straight materials. In ~ the finish of the month, the drumsticks still in the shaping room were estimated to be 35% complete with respect come conversion costs. All materials are added at the beginning of the shaping process. While start the dimension 5A drumsticks, the shaping department incurred these expenses in July:


The shaping department completed 7,500 units and transferred them to the testing and sorting department. No systems were lost to spoilage, which is composed of any units that room not fit for sale due to breakage or various other imperfections. Because the maximum number of units that might possibly be completed is 8,700, the variety of units in the shaping department’s finishing inventory should be 1,200. The total of the 7,500 devices completed and also transferred out and also the 1,200 systems in ending inventory equal the 8,700 feasible units in the shaping department.


Step Three: identify the price per equivalent Unit

Once the equivalent units because that materials and also conversion room known, the expense per indistinguishable unit is computed in a comparable manner together the devices accounted for. The expenses for material and also conversion must reconcile v the total beginning inventory and the costs incurred because that the department during that month.


This details is gathered in a production price report. This report reflects the prices used in the ready of a product, including the price per unit because that materials and also conversion costs, and the quantity of work-related in process and finished goods inventory. A complete production price report because that the shaping department is shown in (Figure).

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Key Concepts and Summary

Process costing has actually a occupational in process inventory account for each department.Equivalent units of production for materials may different from the equivalent units for conversion costs.The total units to account because that is the number of units in the start work in procedure inventory plus the number of units started right into production; this total likewise represents the amount of the number of units completed and the number of units in the ending work in process inventory.The cost per identical unit for products is the total of the material costs for the beginning work in procedure inventory and also the full of material expenses incurred throughout the period.The price per indistinguishable unit because that conversion costs is the complete of the conversion costs for the beginning work in procedure inventory and also the total of conversion prices incurred during the period.The cost of units transferred to the next department is the number of units moved times the full of the cost per identical unit of product plus the expense per equivalent unit for conversion costs.