Rally Gifts uses process costing.In its Forming Department, all the materials are added at the beginning of processing.At the end of the year, 6,000 units remain in Work in Process inventory in the department.During the year, 54,000 units were completed and transferred out and 55,000 units were started.How many equivalent units will be used in the cost per equivalent unit calculation for material costs in the Forming Department?

Question

Quizplus · Accepted Answer

The equivalent units for material costs will include all the units that were both completed and transferred out during the year (54,000 units) as well as the units that remain in Work in Process at the end of the year (6,000 units). Therefore, the total equivalent units for material costs is 60,000 units (54,000 units + 6,000 units).

Rally Gifts Uses Process Costing