Question

In Step 4, the EUP from Step 2 and the cost per EUP from Step 3 are used to assign costs to the:

Answer 1

Answer: 1. units completed and transferred to finished goods.

c. units in ending work in process inventory.

2. b. labor of the maintenance employees.

c. labor of the clerical staff.

Explanation:

1. Equivalent Units of Production (EUP) are very helpful in Process Costing because they help assign costs to manufactured goods as they go along the production process. Using EUP ascribes a value to the manufactured good by assuming it was completed.

For this reason it is useful in determining the cost of goods that are finished and should be transferred to Finished goods because it has already estimated completed good costs.

It is also useful for estimating the amount of units that are still in Progress at the end of the period because it will express the units like they are complete thereby allowing for proper accounting reporting.

2. Indirect labor are those that are not directly involved in the Manufacturing of a good. In this case these would the labor of the maintenance employees who only work to keep the factory performing and so do not actually work on the product and the labor of the clerical staff who are administrative staff and so do not get involved in production.