ACCA Applied Knowledge · Management Accounting · Cost accounting methods
A process has no opening work-in-progress. Input was 5,000 units. Output completed was 4,000 units, and closing work-in-progress was 1,000 units, 100% complete for materials and 50% complete for conversion. Materials cost was $45,000 and conversion cost was $22,000. What is the value of the closing work-in-progress?
This question's data does not reconcile to a clean answer; the computed closing work-in-progress is about $11,444.
- A$12,000
- B$13,000Correct
- C$14,000
- D$11,000
Explanation
Materials cost per equivalent unit = $45,000 / 5,000 = $9. Conversion equivalent units = 4,000 + 500 = 4,500, so cost per unit = $22,000 / 4,500 = $4.89 approx. Closing WIP = 1,000 x $9 + 500 x $4.89 = $9,000 + $2,444 = $11,444, so none match exactly.
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