Question

The production department in a process manufacturing system completed 82,000 units of product and transferred them to finished goods during a recent period. Of these units, 24,600 were in process at the beginning of the period. The other 57,400 units were started and completed during the period. At period-end, 16,100 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 30% 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 70% complete as to materials and 30% complete as to conversion costs. Ending inventory is 20% complete as to materials and 70% complete as to conversion costs.
	Units	% Materials	EUP—Materials
Total EUP

Answer 1

1) Fifo method equivalent unit of production
particulars			unit	% of completion	equivalent unit
Opening WIP			24600	100%	24600
unit compeleted			57400	100%	57400
closing WIP			16100	100%	16100
equivalent units			98100		98100
2)
particulars			unit	% of completion	equivalent unit
Opening WIP			24600	70%	17220
unit compeleted			57400	100%	57400
closing WIP			16100	70%	11270
equivalent units			98100		85890
particulars			unit	% of completion	equivalent unit
Opening WIP			24600	30%	7380
unit compeleted			57400	100%	57400
closing WIP			16100	20%	3220
equivalent units			98100		68000