Computing Equivalent Units, FIFO and Weighted Average Cost Methods Assume each o

Question

Computing Equivalent Units, FIFO and Weighted Average Cost Methods

Assume each of the following conditions concerning the data given:

All materials are added at the beginning of the process.

All materials are added at the end of the process. (Note that this would have to be a department subsequent to the first department for all materials to be added at the end of the process, but ignore that fact for purposes of this solution.)

Half of the materials are added at the beginning of the process, and the balance of the materials is added when the units are three-fourths completed.

In all cases, labor and factory overhead are added evenly throughout the process.

1. Compute separate equivalent units of production, one for materials and one for labor and factory overhead, for each of the conditions listed, using (a) the weighted average cost method and (b) the FIFO cost method.

Equivalent Units - Weighted average cost

Equivalent Units - Weighted average cost

Materials Labor and
Factory Overhead a. (1) Department 1 Department 2 Department 3 a. (2) Department 1 Department 2 Department 3 a. (3) Department 1 Department 2 Department 3 Equivalent Units - FIFO Cost
Materials Labor and
Factory Overhead b. (1) Department 1 Department 2 Department 3 b. (2) Department 1 Department 2 Department 3 b. (3) Department 1 Department 2 Department 3

Explanation / Answer

Compute separate equivalent units of production, one for materials and one for labor and factory overhead, for each of the conditions listed, using (a) the weighted average cost method

All materials are added at the beginning of the process.

All materials are added at the end of the process.

Half of the materials are added at the beginning of the process, and the balance of the materials is added when the units are three-fourths completed.

FIFO cost method.

All materials are added at the beginning of the process.

All materials are added at the end of the process. (Note that this would have to be a department subsequent to the first department for all materials to be added at the end of the process, but ignore that fact for purposes of this solution.)

Half of the materials are added at the beginning of the process, and the balance of the materials is added when the units are three-fourths completed.

Department 1 Calculation of Equivalent units Whole units Material labor and overhead Finished Units 19000 19000 19000 WIP 2000 2000 1500 Total Equivalent Units 21000 20500 Department 2 Calculation of Equivalent units Whole units Material labor and overhead Finished Units 15500 15500 15500 WIP 2000 2000 1000 Total Equivalent Units 17500 16500 Department 3 Calculation of Equivalent units Whole units Material labor and overhead Finished Units 21000 21000 21000 WIP end 1200 1200 300 Total Equivalent Units 22200 21300

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