Question

Beginning Inventory: 8000 units, 75% complete Started: 82,000 units Finished: 80,000 units Ending Inventory: 1000 units,...

Beginning Inventory: 8000 units, 75% complete

Started: 82,000 units

Finished: 80,000 units

Ending Inventory: 1000 units, 50% complete

Required: Based on the above data, compute equivalent units for both materials and conversion costs using FIFO costing. Assume that all materials are added at end of process and conversion costs are applied evenly.

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Answer #1
Here, there is a mistake in the question as the ending inventory should be 10000 units
Beginning inventory 8000
(+) Units started 82000
Total units 90000
(-) Units finished 80000
Ending inventory 10000
All the materials are added at the end of the process, which means they are added when the conversion cost is 100% complete.
Units finished 80000
(-) Beginning inventory units 8000
Units started and finished 72000
Materials Conversion

Beginning equivalent units [ Beginning inventory units * ( 1 - % Completion ) ]

8000

[ 8000 * ( 1 - 0% ) ]

2000

[ 8000 * ( 1 - 75% ) ]

Units started and finished

72000

72000

Ending equivalent units [ Ending inventory units * % Completion ]

0

[ 10000 * 0% ]

5000

[ 10000 * 50% ]
Equivalent units 80000 74500
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