The costs per equivalent units (Total Costs / Equivalent units) is $1.57, and for conversion is $0.98.
What is equivalent units of production ?
- equivalent units of product are a conception used to understand how important plutocrat incompletely completed products are worth to a company.
- They're useful for process going , which is the analysis of plutocrat inflow within the manufacturing process.
- Equivalent units of product( EUP) is the quantum or number in units wherein total costs applicable will be divided to determine the applicable cost of goods vended and ending supplies.
- This represents the product of a process in terms of equivalent units. In other words, it means converting the uncompleted product into its fellow of completed units. Numerous particulars are in nonstop product, so without some way to calculate original units, it would be delicate to determine how important plutocrat was tied up in product costs. Deficient work must be reckoned for on a regular base so that a value can be placed on the deficient work.
Here,
Units transferred to the next production department = 286,000(two eight six, zero zero zero)
Work in process inventory, May 31 (60,000 (40% for Materials, 20% for Conversion)) = 24,000(material), 12,000(conversion)
Equivalent units = 310,000(material), 298,000(conversion)
Cost in work in process inventory, May 1 = 62,400(material), 19,000(conversion)
Cost added during May = $424,300(material), $273,040(conversion)
Total Costs = $486,700(material), $292,040(conversion
Hence, The costs per equivalent units (Total Costs / Equivalent units) is $1.57, and for conversion is $0.98.
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