How do you calculate units completed and transferred out?

EA17-1CHAPTER 17PROCESS COSTING17-1 Give three examples of industries that use process-costing systems.Industries using process costing in their manufacturing area include chemical

How do you calculate units completed and transferred out?

EA17-1CHAPTER 17PROCESS COSTING17-1 Give three examples of industries that use process-costing systems.Industries using process costing in their manufacturing area include chemical processing, oilrefining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor chips,beverages, and breakfast cereals.17-2 In process costing, why are costs often divided into two main classifications?Process costing systems separate costs into cost categories according to the timing of when costsare introduced into the process. Often, only two cost classifications, direct materials andconversion costs, are necessary. Direct materials are frequently added at one point in time, oftenthe start or the end of the process. All conversion costs are added at about the same time, but ina pattern different from direct materials costs. Conversion costs are often added throughout theprocess, which can of any length of time, lasting from seconds to several months.17-3 Explain equivalent units. Why are equivalent-unit calculations necessary in processcosting?Equivalent units is a derived amount of output units that takes the quantity of each input (factorof production) in units completed or in incomplete units in work in process, and converts thequantity of input into the amount of completed output units that could be made with that quantityof input. Each equivalent unit is comprised of the physical quantities of direct materials orconversion costs inputs necessary to produce output of one fully completed unit. Equivalent unitmeasures are necessary since all physical units are not completed to the same extent at the sametime.17-4 What problems might arise in estimating the degree of completion of semiconductorchips in a semiconductor plant?The accuracy of the estimates of completion depends on the care and skill of the estimator andthe nature of the process. Semiconductor chips may differ substantially in the finishing necessaryto obtain a final product. The amount of work necessary to finish a product may not always beeasy to ascertain in advance.17-5 Name the five steps in process costing when equivalent units are computed.The five key steps in process costing follow:Step 1: Summarize the flow of physical units of output.Step 2: Compute output in terms of equivalent units.Step 3: Summarize total costs to account for.Step 4: Compute cost per equivalent unit.Step 5: Assign total costs to units completed and to units in ending work in process.

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