If a company has ending work in process inventory it must use the 5-step process costing procedure to determine the cost of making one unit.

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When a company has ending work in process inventory, it means that some units of production are still in process and have not been completed. Therefore, in order to determine the cost of making one unit, the company must use the 5-step process costing procedure which includes calculating the equivalent units of production, calculating cost per equivalent unit, assigning total costs to units completed and transferred out, assigning total costs to ending work in process inventory, and preparing a cost reconciliation report.

If a Company Has Ending Work in Process Inventory It