A company’s Depart A had a beginning WIP of 200,000 units with 100% completed as it...

A company’s Depart A had a beginning WIP of 200,000 units with 100% completed as it pertains to direct materials and only 40% as it pertains to conversion costs. Department A started 500,000 units during the period. Department A transferred 400,000 total units to Department B during the period. Department A’s ending WIP had 90% of direct materials completed and 30% of conversion costs. Compute the equivalent units of production for the period for direct materials and conversion costs. (10 points)

Solutions

Expert Solution

Method to calculate is not given in the question

making assumptions that weighted average method is used to calculate equivalent units of production

Calculate equivalent units of production under weighted average method

Particular	material	conversion
Units completed and transferred to next department	(400000×100%) 400000	(400000×100%) 400000
Ending inventory(note below)	(30000×90%) 270000	(300000×30%) 90000
Total equivalent units	670000	490000

Note : ending inventory = beginning balance + units started during the period - units completed and transferred

= 200000 + 500000 - 400000 = 300000units

making assumptions FIFO METHOD is followed

calculate equivalent units of production under FIFO METHOD

Particular	material	conversion
Units transferred and completed (400000 unit's)
Beginning inventory 200000 unit's	(200000×0%) 0	(200000×60%) 120000
Units started during the month (200000units)	(200000×100%) 200000	(200000×100%) 200000
Ending inventory (note below)	(300000×90%) 270000	(300000×30%) 90000
Total equivalent units	470000	410000

Ending inventory = beginning inventory + units started during the month - units completed and transferred

= 200000+500000 - 400000 = 300000

I have done both methods for student point of view

Student can choose any method most of the method preferable is weighted average method

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ekkarill92 answered 1 year ago

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