Question

In process cost computations, the cost of ending work in process inventory is calculated on the ____________.

• A. quantities schedule
• B. computation of equivalent production
• C. total Costs to Account For Schedule
• D. total Costs Accounted For Schedule

Answer 1

The correct option is B computation of equivalent production

production term is applied to the work in progress at the end of accounting period. Its an indication of the amount of work done by a manufacturer who have partially completed units.

Basically, fully completed units and partially completed units are expressed in terms of fully completed units.

for Example:

Units completed 6000

Units partially completed 2000 (50% work is completed)

Equivalent Production will be:

No of Units % completion Equivalent Units

6000 100% 6000

2000 50% 1000

Total Equivalent Production 7000