Average Method

Process Costing

1) Account for all units

2) Calculate Equivalent Units

3) Sum up total cost

4) Compute Unit Costs

5) Allocation of costs

Average method Process costing 1. Account for all units: 2. Calculate equivalent units: Mat C.C. Units 31,000 2,000 33,000 31,000 Beg. Inv Added Total 3,000 30,000 33,000 Trans. Out End. Inv Total 1,200 32,200 Trans. Out End. Inv Total 31,000 2,000 33,000 3. Sum up total costs: 4. Compute unit costs: Beg. Inv Added costs Total costs 33,000 32,200 S 1.969697 $3.229814 Materials $ 50,000 65,000 15,000 4,000 19,000 100,000 104,000 / Total 150,000 169,000 5. Allocation of costs to: Transferred out Materials C,C, Cost transferred out $61,060.61 100,124.22 161,184.83 310001.969697 31000 = 3.229814 Ending Inventory: End. Inv D.M C.C. Cost of ending Inventory Total cost 3,939.39 3,875.78 7,815.17 $ 169,000.00