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Equivalent units ACTG 321 Agenda for Lecture 11. Equivalent Units Beginning of year Activity during the year End of year Units 0 0 10 units made.

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Presentation on theme: "Equivalent units ACTG 321 Agenda for Lecture 11. Equivalent Units Beginning of year Activity during the year End of year Units 0 0 10 units made."— Presentation transcript:

1 Equivalent units ACTG 321 Agenda for Lecture 11

2 Equivalent Units Beginning of year Activity during the year End of year Units 0 0 10 units made

3 Equivalent Units Beginning of year Activity during the year End of year Units $$ 0 0 10 units made & sold $1,900 in materials $940 in labor

4 Equivalent Units Beginning of year Activity during the year End of year Units $$ 0 0 10 units made & sold $1,900 in materials $940 in labor What is the cost of each unit made? $284

5 Equivalent Units Beginning of year Activity during the year End of year Units $$ 01 partially finished unit 10 units started: 9 completed & sold; 1 not yet finished. $1,900 in materials, $940 in labor What is the cost of each unit made?

6 Equivalent Units Beginning of year Activity during the year End of year Units $$ 0 1 partially finished unit 9 units started & finished. 1 unit, not yet finished, is 50% complete. $1,900 in materials $940 in labor What is the cost of each unit made? $299

7 Equivalent Units Beginning of year Activity during the year End of year Units $$ 0 1 partially finished unit 9 units started & finished. 1 unit, not yet finished, is 100% complete as regards materials, 40% complete as regards labor. $1,900 in materials $940 in labor What is the cost of each unit made?$290

8 Equivalent Units Beginning of year Activity during the year End of year Units $$ 1 unit1 finished unit 10 units started & completed; 10 units sold. $1,900 in materials $ 940 in labor $700

9 Equivalent Units Beginning of year Activity during the year End of year Units $$ 1 unit1 finished unit 10 units started & completed; 10 units sold. $1,900 in materials, $940 in labor$700 What is the cost of goods sold?

10 Equivalent Units Beginning inventory Activity during the year End of year 1 unit at $700 per unit 1 unit10 units produced at $284 per unit. What is the cost of goods sold? FIFO: 1 unit at $700 + 9 units at $284 = $3,256 LIFO: 10 units at $284 = $2,840 Weighted Average: 11 units at a total cost of $3540 = $322 per unit. COGS = $3,218.

11 Equivalent Units Beginning inventory Activity during the year End of year 1 unit at $700 per unit 1 unit10 units produced at $284 per unit. Weighted Average: 11 units at a total cost of $3540 = $322 per unit. COGS = $3,218. The weighted average method averages between the cost of goods on hand at the beginning of the period, and the cost of goods produced during the period.

12 Equivalent Units Beginning of year Activity during the year End of year Units $$ 1 unit, 20% complete The 1 unit coming into the period is completed. 10 units are started and completed. 1 unit is 20% complete. $2,840 in materials and labor What is the cost of each unit made? 1 unit that is 50% complete. $150 in materials and labor

13 Equivalent Units Beginning of year Activity during the year End of year Units $$ 1 unit that is 20% complete The 1 unit coming into the period is finished. 10 units are started and completed. 1 unit is 20% complete. $2,840 in materials and labor cost per unit = total $$ ÷ equivalent units 1 unit that is 50% complete. $150 in materials and labor

14 Equivalent Units Beginning of year Activity during the year End of year Units $$ 1 unit that is 20% complete The 1 unit coming into the period is finished. 10 units are started and completed. 1 unit is 20% complete. $2,840 in materials and labor cost per unit = $2,990 ÷ 11.2 = $266.96 1 unit that is 50% complete. $150 in materials and labor

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