Question

The production department in a process manufacturing system completed 88,000 units of product and transferred them to finished goods during a recent period. Of these units, 26,400 were in process at the beginning of the period. The other 61,600 units were started and completed during the period. At period-end, 16,400 units were in process.

Prepare the department’s equivalent units of production with respect to direct materials under each of the three separate assumptions using the FIFO method for process costing

Equivalent Units of Production (EUP)—FIFO Method 1. All direct materials are added to products when processing begins. Units % Materials EUP—Materials Total EUP 2. Beginning inventory is 40% complete as to materials and conversion costs. Ending inventory is 70% complete as to materials and conversion costs. Units % Materials EUP—Materials Total EUP 3. Beginning inventory is 60% complete as to materials and 40% complete as to conversion costs. Ending inventory is 30% complete as to materials and 60% complete as to conversion costs. Units % Materials EUP—Materials Total EUP

Answer 1

Equivalent Units of Production (EUP)—FIFO Method
1. All direct materials are added to products when processing begins.
	Units	% Materials	EUP—Materials
Beginning WIP Inventory completed	26,400	0% [100% was already complete]	-
Units started and completed [88000 - 26400]	61,600	100%	61,600
Ending WIP Inventory	16,400	100%	16,400
Total EUP			78,000
2
	Units	% Materials	EUP—Materials
Beginning WIP Inventory completed	26,400	60% [40% was already complete]	15,840
Units started and completed [88000 - 26400]	61,600	100%	61,600
Ending WIP Inventory	16,400	70%	11,480
Total EUP			88,920
3
	Units	% Materials	EUP—Materials
Beginning WIP Inventory completed	26,400	40% [60% was already complete]	10,560
Units started and completed [88000 - 26400]	61,600	100%	61,600
Ending WIP Inventory	16,400	30%	4,920
Total EUP			77,080