Hudson Manufacturing Uses Process Costing Required:
A

question 37

Essay

Hudson Manufacturing uses process costing.The following information was available for the current year: $$\begin{array} { l r r } \text { Number of units in bepinnine wark-in-pracess inventary } & 5000 & \text { (20\% complete) } \\\text { Number of urits started in the curent period } & \text { 60 000 } & \\\text { Number of units in endine wark-in-process inventary } & 8000 & \text { (60\% complete) }\end{array}$$
Required:
A. If Hudson uses the first-in, first-dut (FIFO) method, calculate tatal equivalent units far the year.

B. If Hudson uses the weighted-average method calculate total equivalent units for the year.

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Definitions:

Economies of Scale

The cost advantage that arises with increased output of a product, where costs per unit decrease due to efficiencies gained from larger scale operations.

Long-Run Average Cost Curve

A curve showing the lowest possible cost at which a firm can produce any given level of output in the long run when all inputs are variable.

Downward Sloping

Describes a line or curve on a graph that shows a decrease in value as it moves from left to right, often used in economics to describe how changes in price affect demand.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.