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Conlon Chemicals manufactures paint thinner. Information on the work in process follows: Beginning inventory, 42,000 partially...

Conlon Chemicals manufactures paint thinner. Information on the work in process follows:

Beginning inventory, 42,000 partially complete gallons.
Transferred out, 209,000 gallons.
Ending inventory (materials are 19 percent complete; conversion costs are 12 percent complete).
Started this month, 243,000 gallons.

Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs.

Required:

a. Compute the equivalent units for materials using FIFO.

b. Compute the equivalent units for conversion costs using FIFO.

Expert Solution

Answer:

a. Computation of the equivalent units for material and conversion costs as follows:

Particulars

Physical units

% of Completion

Materials

Beginning work in process inventory	42,000	50%	21,000
Units start and completed during the year	167,000	100%	167,000
Ending work in process inventory	34,000	19%	4,080
Equivalent units of production			192,080

During this month, started with 243,000 units out of which 42,000 are held in beginning work in process and therefore, 209,000 units are completed out of which 167,000 are from this month and balance of 42,000 are related to beginning work in process inventory.

In FIFO, for beginning work in process inventory, only pending percentages are used and therefore, 50% is used for materials.

Therefore, equivalent units of production for materials cost are 192,080 units.

b. Computation of the equivalent units for material and conversion costs as follows:

Particulars

Physical units

% of Completion

Conversion costs

Beginning work in process inventory	42,000	70%	29,400
Units start and completed during the year	167,000	100%	167,000
Ending work in process inventory	34,000	12%	6,460
Equivalent units of production			202,860

During this month, started with 243,000 units out of which 42,000 are held in beginning work in process and therefore, 209,000 units are completed out of which 167,000 are from this month and balance of 42,000 are related to beginning work in process inventory.

In FIFO, for beginning work in process inventory, only pending percentages are used and therefore, 70% is used for conversion costs.

Therefore, equivalent units of production for conversion costs are 202,860 units.

ekkarill92 answered 1 year ago

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