Allocation of Cost in Auto Industry
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On December 31, 1990, you find that the company had incurred costs of $2,700,000 on this contract, that 160 cars had been delivered to the purchaser, that 25 were in the process of construction, and 25 were yet to be built. The 25 cars in process were estimated by management to be about 80 percent complete.
At what value should the 160 cars be costed in the statement of income?
In the above problem, at what value should the 25 cars in process be carried in the balance sheet of December 31, 1990?
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Solution Summary
Equivalent units completed, cost per equivalent unit, and cost of units completed are determined.
Solution Preview
Equivalent units completed = 160 + (25 x 0.80) = 180
Cost per ...
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