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Percentage Complete

Sami Abulehya's Profile

In process costing system how the percent complete with respect to conversion cost is calculated?

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Simplistic View

Total (estimate) all OA for a given period/year. Divide by number of units to be produced. You now have conversion cost per unit. Add DL.

OR

Total (estimate) DL+OA for given period/year. Divide by number of units to be produced.

Sami Abulehya
Title: Chief Accountant
Company: Laf
(Chief Accountant, Laf) |

Thanks for your reply. What is the meaning of "OA". and how the same can be used to calculate equivalent units of production.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

OA is overhead application (rate).

Same calculation. You figure what the EUP is, and apply Conversion cost, which is calculated on a finished item.

EUP is an estimate of what percent complete the process is in (WIP).

Might I suggest you review your cost accounting textbook.

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