Exercise 16-10 Computing equivalent units of production-FIFO L.O. C4 During Apri

Question

Exercise 16-10 Computing equivalent units of production-FIFO L.O. C4

During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 42,000 were in process in the production department at the beginning of April and 270,000 were started and completed in April. April's beginning inventory units were 70% complete with respect to materials and 30% complete with respect to labor. At the end of April, 59,000 additional units were in process in the production department and were 70% complete with respect to materials and 20% complete with respect to labor.

Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the FIFO method.

During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 42,000 were in process in the production department at the beginning of April and 270,000 were started and completed in April. April's beginning inventory units were 70% complete with respect to materials and 30% complete with respect to labor. At the end of April, 59,000 additional units were in process in the production department and were 70% complete with respect to materials and 20% complete with respect to labor.

Explanation / Answer

Step 1 - Summarize the flow of physical units, regardless of their stage of completion.

Beginning Balance - 42,000
Transferred to FG - (312,000)
Ending Balance - 59,000
Therefore UNITS ADDED to production was 329,000

BB + Units Added = 371,000 to be accounted for, and
Units Transferred to FG + EB = 371,000

Step 2 - Compute equivalent units produced.

Units transferred to FG - 312,000 (312,000 DM & 312,000 DL)
Ending Balance - 59,000 (70% DM = 41,300) (20% DL = 11,800)
Equivalent units of production = 353,300 Direct

Materials & 323,800 Direct Labor

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