Question

Murray Chemical Company refines a variety of petrochemical products. These data are from the firm’s Houston plant:

Work-in-process inventory, September 1	4,000,000	gallons
Direct materials	50	% completed
Conversion	20	% completed
Units started in process during September	4,850,000	gallons
Work-in-process inventory, September 30	2,400,000	gallons
Direct materials	40	% completed
Conversion	60	% completed

Required:

1. Compute the equivalent units of direct materials and conversion for the month of September using the weighted-average method.

Direct Materials:

Conversion:

2. Compute the equivalent units of direct materials and conversion for the month of September using the FIFO method.

Direct Materials:

Conversion:

Answer 1

1. Weighted-average method

	Units	% Materials	EUP Materials	% Conversion	EUP Conversion
Units completed and transferred out (4,000,000+ 4,850,000 - 2,400,000)	6450000	100%	6450000	100%	6450000
Ending work in process - units	2,400,000	40%	960000	60%	1440000
Total units			7,410,000		7,890,000

2. FIFO method

	Units	% Materials	EUP Materials	% Conversion	EUP Conversion
Beginning work in process inventory - units	4,000,000	50%	2,000,000	20%	800,000
Units started and completed (4,850,000 - 2,400,000)	2450000	100%	2450000	100%	2450000
Ending work in process - units	2,400,000	40%	960000	60%	1440000
Total units			5,410,000		4,690,000