if the total costs are $10,000 for the production of 1,000 units, assuming we completed then all, the cost per unit is simple: $10,000 divided by 1,000 equals $10 per unit. But when we didn’t complete all of the units that we worked on, it gets more complicated. So if total costs are $10,000 for the production of 1,000 units and 800 of them are completed with 200 of them remaining in work-in-process at the end of the month that are 50% complete, we have a new situation. 200 units X 50% = 100 equivalent units that is added to 800 completed units to get 900 equivalent units of production. Now $10,000/900 E.U. = $11.11 per E.U.
Now we can use this unit cost to work through reconciliation of the costs transferred out and the cost in ending inventory. So, class, how much cost will remain in the ending inventory, and how much will be transferred out of this department?
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