Page 491 - F2 - MA Integrated Workbook STUDENT 2018-19

Answers

Step 2 – calculate the EUs for each element of cost

Equivalent units
Physical units Direct materials Conversion costs

Finished output
Opening WIP 15,000 0% 0 60% 9,000

Completed units 23,000 100% 23,000 100% 23,000
Closing WIP 7,000 100% 7,000 80% 5,600
Total EU 30,000 37,600

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

Direct Materials Conversion costs
$ $
Current period only 154,200 146,640

Step 4 – calculate the cost per EU

Direct materials = $154,200 ÷ 30,000 EU = $5.14 per EU

Conversion costs = $146,640 ÷ 37,600 EU = $3.90 per EU

Step 5 – value the completed units and closing WIP

The cost of finished output can be calculated as follows:

$

Completed units

Opening WIP

Value b/fwd 100,300

Cost to complete = 9,000 EU × $3.90 35,100

Units started and completed = 23,000 EU × $9.04 207,920

343,320

Closing WIP = 7,000 EU × $5.14 + 5,600 EU × $3.90 57,820

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