MGA 202 1st Edition Lecture 10Outline of Last Lecture: Chapter 4I. Job Order CostingII. Process CostingIII. Similarities & Differences in Costing SystemsIV. Cost FlowsV. Processing DepartmentsOutline of Current Lecture- Chapter 4Partially Completed Units- A department usually has some partially completed units in its beginning and ending inventory - This can complicate the determination of a department’s output for a given period - And also complicate the unit cost that should be assigned to that department’s output - Equivalent units = number of partially completed units X % completion of those unitsExercise 3. Answer: A. Costs w/ Partially Completed Units 1. Calculate Equivalent Units of Production 2. Compute Cost per Equivalent Unit3. Calculating Inventory Costs: Ending WIP & Units Transferred Out4. Cost Reconciliation ReportCalculate Equivalent Units of Production These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.1. Identify the units transferred of the 1st department 2. Calculate the equivalent units in ending WIP with respect to materials = # of partially completed units X completion % 3. Calculate Equivalent Units of Production = # of units transferred out + equivalent units in ending WIP inventory 4. Repeat steps 2 & 3 for conversion costs Compute Cost per Equivalent Unit (a separate calculation is made for each cost category in each processing department)1. Identify cost of beginning WIP inventory for materials of 1st department2. Identify Cost added during the period for materials3. Calculate Total Cost for materials = cost of beginning WIP inventory + cost added during period4. Calculate cost per equivalent unit for materials = Total Cost / Equivalent Unit 5. Repeat all steps to calculate cost per equivalent unit for conversion of the 1st departmentCalculate Inventory Costs1. Ending WIP and Units Transferred Out 2. Cost Reconciliation Report Next Lecture-3/02Chapter 6 (We skip Chapter 5, Chapter 6 will be on Exam 1) I. Variable CostingII. Absorption