Select the correct formula for computing the cost to be assigned to ending inventory in a process costing system.
A) Ending inventory equivalent units × cost per equivalent unit
B) Ending inventory units × cost per equivalent unit
C) Beginning inventory cost + transferred-in costs
D) Beginning inventory units + units transferred in - units transferred out

Question

Quizplus · Accepted Answer

The cost to be assigned to ending inventory in a process costing system is based on the number of equivalent units of production (completed and partially completed units) and the cost per equivalent unit. Therefore, option A, which multiplies the ending inventory equivalent units by the cost per equivalent unit, is the correct formula. Options B, C, and D are incorrect because they do not involve the use of equivalent units.

Select the Correct Formula for Computing the Cost to Be