Question

Alaskan Fisheries, Inc. processes salmon for various distributors. Two departments are involved: Department 1 and Department 2. Data relating to pounds of salmon processed in Department 1 during July are presented below: Work in process, July 1 33,000 pounds at 40% complete* Started into processing in July 445,000 pounds Work in process, July 31 38,000 pounds at 70% complete* *Percentage completion refers to labour and overhead only. All materials are added at the beginning of processing in department 1. Labour and overhead (conversion) costs are incurred uniformly throughout processing. Using the FIFO method, how many equivalent pounds of salmon for conversion were completed and during the month of July?

A) 453,400 pounds of salmon B) 446,800 pounds of salmon C) 438,200 pounds of salmon D) 471,200 pounds of salmon E) 464,800 pounds of salmon

Answer 1

Option A (453,400 Pounds of Salmon) is the Correct Answer

Using FIFO Method

Particulars	Units	% Conversion	EUP Conversion
Beginning Work in Process Inventory July 01	33,000	60%	19,800
Units Started in July and Completed Out during the July	407,000	100%	407,000
Ending Work in Process Inventory July 31	38,000	70%	26,600
Total Equivalent Annual Units of Production with respect to Conversion			453,400

EUP Stands for Equivalent Annual Units of Production

EUP Conversion = Units * % Conversion

Notes

Units Transferred Out during the July = Beginning Work in Process Inventory + Units Started during the July - Ending Inventory of Work in Process

= 33,000 + 445,000 - 38,000

= 440,000 Pounds

Units Started in July and Completed during the July = Units Transferred Out during the July - Beginning Work in Process Inventory July 01

= 440,000 - 33,000

= 407,000 Pounds

As the Beginning Work in Process Inventory was 40% Completed the Balnce 60% was completed during the Month of July as per FIFO Method.

Ending Work in Process Inventory is 70% Completed with respect to Conversion.