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Process costing

vinay mendon (compliance analyst) (32 Points)

07 September 2014

Can someone please explain me why the answer for the below questions in 850. The questions is related to process costing.

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4 Replies

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 07 September 2014

Might be answers which u are looking is wrong....

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CMA Sanjay Hakhu (GM-Finance & Accounts) (65 Points)
Replied 07 September 2014

			OUTPUT
INPUT				MATERIAL		LABOUR & OVERHEADS
	UNITS		UNITS	%	EQUIV UNITS	%	EQUIV UNITS
OP. WIP	400	FINISHED FROM OP WIP	400	100	400	60	240
INTRODUCED	1000	FINISHED FROM INTRODUCED	400	100	400	100	400
		CL. WIP	600	75	450	20	120
	1400		1400		1250		760

Apart from Op. WIP, above total equivalent units of material for the period (i.e., introduced and closing WIP are 850 units).

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vinay mendon (compliance analyst) (32 Points)
Replied 07 September 2014

@ CMA Sanjay Hakhu: thank you for the Answer. I am actually getting confused on why closing WIP is calculated 75%. If you can explain that part that would be help ful.

CMA Sanjay Hakhu (GM-Finance & Accounts) (65 Points)
Replied 08 September 2014

Since the process is complete only 20%(since the degree of completion quoted relates to labour and overhead costs), the materials added is 3/4 th only( .e., 75%).