ExpertHard2 marksMultiple Choice
ACCA · Question 16 · Cost accounting techniques
A chemical plant uses the weighted average method of process costing.
Opening work-in-progress (WIP) was 2,000 units (60% complete as to conversion).
During the period, 8,000 units were started.
Closing WIP was 3,000 units (40% complete as to conversion).
There were no normal or abnormal losses.
What are the equivalent units for conversion costs?
A chemical plant uses the weighted average method of process costing.
Opening work-in-progress (WIP) was 2,000 units (60% complete as to conversion).
During the period, 8,000 units were started.
Closing WIP was 3,000 units (40% complete as to conversion).
There were no normal or abnormal losses.
What are the equivalent units for conversion costs?
Answer options:
A.
7,000 units
B.
8,200 units
C.
8,800 units
D.
10,000 units
How to approach this question
First, find units completed and transferred out (Opening + Started - Closing). Then, for weighted average, add the equivalent units of closing WIP. Ignore the completion percentage of opening WIP.
Full Answer
B.8,200 units✓ Correct
Units completed = 2,000 (opening) + 8,000 (started) - 3,000 (closing) = 7,000 units.
Under weighted average, equivalent units = completed units (7,000) + closing WIP equivalent units (3,000 * 40% = 1,200) = 8,200 units.
Common mistakes
Trying to use the FIFO method and subtracting the opening WIP equivalent units.
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