Page 216 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 9

Step 3 – calculate the total cost for each element of cost

Direct Materials Conversion costs
$ $

Opening WIP 79,800 20,500

Current period 154,200 145,180
234,000 165,680

Step 4 – calculate the cost per EU

Direct materials = $234,000 ÷ 45,000 EU = $5.20 per EU

Conversion costs = $165,680 ÷ 43,600 EU = $3.80 per EU

Step 5 – value the completed units and closing WIP

The cost of finished output can be calculated as follows:

$

Completed units = 38,000 EU × $9.00 342,000

Closing WIP = 7,000 EU × $5.20 + 5,600 EU × $3.80 57,680

Step 6 – complete the ledger accounts

Process 2 account
Kilos $ Kilos $
Opening WIP 15,000 100,300 Output 38,000 342,000

Materials 30,000 154,200 Closing WIP 7,000 57,680
Conversion cost 145,180

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45,000 399,680 45,000 399,680

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