The amounts for these journal entries are calculated by multiplying the cost per unit times the number of units that moved from one function to the next. The number of units is determined separately for each function using the actual number of units completed and transferred out of the function adjusted for partially completed units that were not transferred. This calculated number of units used is called equivalent units. If there are no in-process units at the beginning or end of the period, the per unit cost is calculated by dividing the total costs assigned to a function (department) by the total number of units that were started and completed during the period. The total costs include materials, labor, and overhead. If the function has work-in-process inventory at the beginning of the period, the number of equivalent units must be calculated. Equivalent units represent the number of units that could have been 100%
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