A must:

- Go back to 49. Did not get it!

- Revise slide 62 (below)

Equivalent units are a way of expressing partial work in terms of fully

completed units.

The equivalent units for completed and transferred-out goods are always
100% for both materials and conversion costs since these goods are fully
processed. Therefore, if 700,000 units were completed and transferred out,
they would represent 700,000 equivalent units for both materials and
conversion costs.

Why the slides argued that Beginning work in process (work in process, June
1) is not part of the equivalent-units-of-production calculation?

The equivalent units calculation only considers the percentage of completion

of these beginning units during the current period, not the entire amount of
work represented by those units.

Slide 5:
Heterogeneous in nature: refers to the diversity and uniqueness of the
products manufactured by a company or within an industry. In this context,
"heterogeneous" means that the products vary significantly in terms of
characteristics, specifications, design, quality, or any other attributes. This is in
contrast to "homogeneous" products, which are essentially identical and
indistinguishable from one another.

Slide 7
Service companies offering individualized, nonroutine services benefit from a
job order cost system because it allows them to track and allocate costs
specifically for each unique job or project, matching the customized nature of
their services.

Service companies performing routine, repetitive services are more suited to

a process cost system, as this system efficiently accumulates and averages
costs over a large number of similar services, aligning with the standardized
nature of their operations.
Slide 13:
These products are distinguishable. Why we are not using job order cost
system?
Because cost likely produced in high volumes and with consistent production.

A process costing system is more suitable in such a scenario because it allows

for the efficient accumulation of costs across each process or department,
which is ideal for mass production of similar items.

Slide 30:
1. Full-Time Equivalent (FTE) Student: This is a way to count part-time and
full-time students together. Imagine if part-time students can be combined to
make up full-time students. For example, if two part-time students each take
half the classes of a full-time student, together they are considered one "full-
time equivalent" student.
2. Calculating FTE Students: You take the number of full-time students and add
the "combined" full-time equivalent of the part-time students. If each part-
time student is counted as 60% of a full-time student, then 1,000 part-time
students together are like 600 full-time students (because 1,000 times 60%
equals 600).
3. Total FTE Students: Add the actual full-time students (900) to the full-time
equivalent of part-time students (600). That gives you 1,500 FTE students in
total.
4. Cost Per FTE Student: To find out how much it costs to teach each FTE
student, you divide the total cost of teaching everyone by the total number of
FTE students.

So, if the total cost is $9,000,000, you divide that by 1,500 FTE students.

$9,000,000 divided by 1,500 equals $6,000.

That means the school spends $6,000 on instruction for each "full-time equivalent"
student over the year. This number helps the school understand how much it spends
on average for each student, combining both full-time and part-time students.

Slide 35:
"Work in Process" is the status of units from an earlier time, while "Started
into Production" is the activity of adding new units to the production process
during the current period.
Slide 39:
Total equivalent unit: 20,000+(5000*60%)= 23,000
10,000*40%= 4000
Total equivalent unit (material): 20,000+(5000*60%)= 23,000
Total equivalent unit (conversion): 20,000+(5000*60%)= 23,000

Slide 39:

We need to calculate the equivalent units for both direct materials and conversion
costs for the ending work in process. Since the beginning inventory is not 100%
complete, we don't consider it for the equivalent units calculation under the
weighted-average method. We only consider the work done during the current
period.

So, the equivalent units are as follows:

1. Equivalent units for completed and transferred out:

20,000 units×100%=20,000 equivalent units20,000 units×100%=20,00
0 equivalent units
2. Equivalent units for ending work in process:
5,000 units×60%=3,000 equivalent units5,000 units×60%=3,000 equiv
alent units

Now, add the equivalent units for both components:

Total equivalent units=20,000+3,000=23,000Total equivalent units=20,000+
3,000=23,000

Therefore, the equivalent units of production are 23,000, which matches one of the
provided options.

Slide 49:
these concepts ensure that the department accounts for every unit it started
with and every unit it received during the period, and that all of these units are
accounted for at the end of the period as either completed or still in process.

In process costing, when you're determining the cost per equivalent unit, you don't
add the physical count of completed units directly to the equivalent units; instead,
you calculate the equivalent units for two separate categories:

1. Materials: The equivalent units for materials typically assume that the
materials are added at the beginning of the process. So, if units are completed
 and transferred out, they would be 100% complete with respect to materials.
This also applies to any units still in work-in-process (WIP) but only to the
extent that the materials have been added (which is often at 100%).
2. Conversion Costs: Conversion costs (labor and overhead) may be added
more evenly throughout the production process. For completed units, the
equivalent units for conversion costs would also be 100%. For WIP, you
calculate equivalent units based on the percentage completion of those
conversion costs.

To find the cost per equivalent unit, you would:

1. Determine the total costs for materials and conversion costs separately.
2. Calculate the equivalent units for materials and conversion costs separately,
considering both the completed and transferred out units (which are 100%
complete) and the WIP units (which may be less than 100% complete, based
on their stage in the production process).
3. Divide the total materials costs by the equivalent units of materials to get the
cost per equivalent unit for materials.
4. Divide the total conversion costs by the equivalent units of conversion to get
the cost per equivalent unit for conversion.

The sum of these two costs (materials and conversion) gives you the total cost per
equivalent unit. These cost per equivalent unit figures are then used to assign costs
to both the units completed and transferred out as well as to the units still in WIP at
the end of the period. For completed units, you would multiply the total cost per
equivalent unit by the number of completed units to assign the total cost to them.
For WIP units, you would multiply the cost per equivalent unit by the equivalent units
of WIP.

Slide 54:
To Reconcile Costs: It verifies that the total costs to be accounted for
(beginning WIP costs plus costs added during the period) are reconciled with
the total costs accounted for (costs assigned to completed units and ending
WIP).

Slide 56:
Materials= 10$* 2500=25,000
Conversion = 30$* (2500*40%) = 30,000

Slide 58:
the term "standardized methods" refers to the uniform, consistent procedures
and processes that a company uses in the production of its goods. This aspect
is similar to process costing because, in both systems, there is an assumption
that products go through a series of steps or stages that are consistent from
one unit to the next.

Slide 59:
Completed:
Materials = $6*12,000= 72,000
Conversion=$9*12,000 = 108,000
Work in Process:
Material=$6*800=4,800
Conversion = $9* (25%*800)=1,800

Slide 62:

The concept of "Computation of equivalent units - FIFO" relates to the First-

In, First-Out method in process costing. Under FIFO, equivalent units of
production are computed only on the work done during the current period,
without mixing in any work done in previous periods.

In a FIFO (First-In, First-Out) process, we account for the units that were in
progress at the beginning of the period separately from the units that were
started and completed during the period. This is because under FIFO, we
assume that the first units to be completed are the ones that were already in
progress at the beginning of the period.

For the beginning work in process, if there were 500 units and they were 40%
complete at the start, under FIFO, we'd calculate the additional work needed
to complete them in the current period, which would be 60% of 500 units
(Under FIFO, we only consider the work needed to complete these units in the
current period. Since they were 40% complete, they needed 60% more work to
be finished in the current period)

For the units started and completed during the period, 7,600 units are the
ones that were started and completed during the period, excluding those that
were already in process at the beginning of the period (500) and those that are
still in process at the end of the period (400).
Total units accounted for at the end of the period: 8,500

For the ending work in process, the units still in process at the end are
considered for the percentage of work completed during the current period
(Since these are units that started and remained in process during the current
period, their full work progress (75%) is counted towards the equivalent units).

Additional info:

Here's what we did to follow FIFO in this scenario:

1. Separated Beginning Inventory Work: We first identified the units that were
already in progress at the beginning of the period (500 units that were 40%
complete). Under FIFO, we consider these units first for completion.
2. Accounted for Work Done on Beginning Inventory: We completed these
500 units first during the new period. Since they were 40% complete, we only
needed to do the remaining 60% of the work on them.
3. Calculated the Units Started and Completed: After accounting for the
beginning inventory, we then looked at how many units were both started and
finished during the period. To find this, we took the total units accounted for
at the end of the period (8,500 units) and subtracted both the ending work in
process (400 units that were 75% complete) and the beginning work in
process (500 units).
4. Applied Completion Percentage to Ending Inventory: We took into
account that the units remaining in process at the end of the period (400
units) were not fully completed (only 75% done). This is why they are not
included in the 'Started and completed' figure but are instead part of the
computation for equivalent units under FIFO.

By doing this, we respected the FIFO assumption that the first units out are the first
ones in, meaning that the units in progress at the beginning of the period are
considered to be completed before any new units are processed.