Instead the units are treated as part of a large pool with an average cost per

Instead the units are treated as part of a large pool

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Instead, the units are treated as part of a large pool with an average cost per unit.Notes
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Chapter Outline3.Equivalent UnitsDirect Materialsadd together the results ofa two-step calculation:a.Units completed during the period times 100% (since the units have all required materials).b.Units in ending inventory times the percent of materials added during the period.4.Equivalent UnitsDirect Labor and Factory Overheadadd together the results of a two-step calculation:Units completed during the period times 100% (since the units have all required labor and overhead).Units in ending inventory times the percent of labor and overhead added during the period.C.Step 3: Compute Cost per Equivalent Unit1.The total of the costs in the beginning inventory and the costs added to the department during the period divided by the equivalent units of production (EUP) in the period equals the cost per equivalent unit for the period.2.Perform the calculation separately for direct materials, direct labor, and overhead.3.Total cost per equivalent unit equals the sum of the three individual costs per equivalent unit (direct materials, direct labor, and factory overhead).D.Step 4: Cost Assignment and Reconciliation1.Similar in concept to the reconciliation of the physical flow of units (except that dollars are used instead of units).2.The following totals should agree:a.Cost of beginning inventory plus cost assigned to units started during the period (i.e., amounts debited to the Goods in Process Inventory during the period)equals total costs to account for.b.Cost assigned to units completed during the period, plus thecost assigned to ending inventory also equals the costs accounted for (see 3 below). 3.Sources of amounts used in cost reconciliation:Notes
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Chapter Outline
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