Asked by Carol Rodgers on Jun 08, 2024
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Heara Ltd manufactures metal sheets, and uses the FIFO process costing. On 1 May the Rolling Department had 3000 units work in progress, which were 50 per cent completed as to conversion costs. During May 8000 units were completed and transferred out. The remaining work in progress on 30 May was 2000 units at 50 per cent complete in terms of conversion rate. What is the equivalent unit of conversion?
A) 2000 units
B) 7500 units
C) 9000 units
D) 10 500 units
FIFO Process Costing
A method of process costing that assumes the first items produced are the first sold or used, ideal for businesses where inventory shelf life is a concern.
Equivalent Unit
A concept in cost accounting used to measure the amount of work done on partial units of production, converting them into a number of fully completed units for costing purposes.
Conversion Rate
Conversion rate is a metric that measures the percentage of users who take a desired action out of the total number of visitors, often used in digital marketing and e-commerce.
- Understand the significance of equivalent units in determining the costs associated with products.
- Understand the principle of equivalent units for materials and conversion expenses.
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Learning Objectives
- Understand the significance of equivalent units in determining the costs associated with products.
- Understand the principle of equivalent units for materials and conversion expenses.
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