37 Process Costing Closing Wip Different Stages of Completion Notes
37 Process Costing Closing Wip Different Stages of Completion Notes
37 Process Costing Closing Wip Different Stages of Completion Notes
When materials, labour and overheads are processed to different degrees of completion, the cost per equivalent
unit calculation includes the following steps:
EUs EUs
Materials Conversion
Fully-completed units X X
Units $ Units $
Materials X Y Fully completed units X Y
Labour Y Closing WIP c/f X Y
Overheads Y
TOTAL X Y = X Y
Opening WIP b/f X Y
Example 1:
2,000 units of material costing $5,000 are input to Process P. In addition, labour costing $2,000 and overheads
costing $1,000 are incurred during the period. At the end of the period, there are 1,500 fully-completed units
which are transferred to Process Q and there are 500 units of work-in-process. The work-in-process is 100 per
cent complete for materials, and 60% complete for labour and overheads.
Calculate the number of equivalent units at the end of the process and the cost per equivalent unit.
Solution: