Work-in-progress

In this lesson

1. 0:00 Introduction to work in progress
2. 2:21 Understanding equivalent units concept
3. 5:23 Separating materials and conversion costs
4. 7:51 Calculating equivalent units with opening balances
5. 14:49 FIFO method for opening work in progress
6. 26:26 Weighted average cost method explained
7. 34:06 Testing equivalent units knowledge

About this lesson

You'll learn why you can't simply divide total costs by total units when production isn't finished, and how to use equivalent units to fairly spread production costs between completed and part-finished goods. The lesson covers two key scenarios. First, when materials and conversion costs are incurred at different stages of production—for example, when all raw materials are added at the start but labour and overheads are spread throughout the process. You'll work through a detailed example showing how to calculate separate equivalent units for each cost element, then use those to value both finished output and closing work-in-progress. The second major focus is handling opening work-in-progress from the previous period. You'll learn the two main methods: FIFO (first-in, first-out), which keeps opening work-in-progress costs separate and is used for discrete products like tables; and weighted average cost (Avco), which pools opening and current period costs together and works well for continuous products like liquids or sand. Throughout the lesson, you'll see how to build a statement of equivalent units—the foundation of accurate work-in-progress accounting—and how to use it to complete a full process account. Multiple worked examples show how these concepts appear in real exam questions, including objective test scenarios where you might be asked to calculate equivalent units or identify the percentage completion of closing stock. By the end, you'll feel confident tackling any work-in-progress question your exam throws at you.

Duration: 36m