Computing Equivalent Units of Production Using the data given for Cases 1–3 belo
ID: 2549991 • Letter: C
Question
Computing Equivalent Units of Production
Using the data given for Cases 1–3 below, and assuming the use of the average cost method, compute the separate equivalent units of production—one for materials and one for labor and overhead—under each of the following assumptions (labor and factory overhead are applied evenly during the process in each assumption):
Assumptions:
All materials go into production at the beginning of the process.
All materials go into production 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.)
At the beginning of the process, 75% of the materials go into production and 25% go into production when the process is one-half completed.
Note that you will have three solutions for each of the following cases:
Case 1 — Started in process 5,000 units; finished 3,000 units; work in process, end of period, 2,000 units, three-fourths completed. Case 2 — Opening inventory 5,000 units, three-fifths completed; started in process 40,000 units; finished 39,000 units; work in process, end of period, 6,000 units, one-fourth completed. Case 3 — Opening inventory 1,000 units, one-half completed, and 8,000 units, one-fourth completed; started in process 30,000 units; finished 29,000 units; closing inventory work in process 5,000 units, one-fourth completed, and 5,000 units, one-half completed.Explanation / Answer
CASE-1 UNITS TO ACCOUNT FOR: Beginning Work in Process units 0 Add: Units Started in Process 5,000 Total Units to account for: 5,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 3,000 Ending Work in Process 2,000 Total Units to be accounted for: 5,000 req-a: materiala in beginning of process Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 3,000 100% 3,000 Ending Work in Process 100% 2,000 75% 1,500 Total Equivalent units 5,000 4,500 Req-b: material used at the end Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 3,000 100% 3,000 Ending Work in Process 0% 0 75% 1,500 Total Equivalent units 3,000 4,500 Req-c: 75% material in beginning and 25% go when 50% complete Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 3,000 100% 3,000 Ending Work in Process 100% 2,000 75% 1,500 Total Equivalent units 5,000 4,500 CASE-2 UNITS TO ACCOUNT FOR: Beginning Work in Process units 5,000 Add: Units Started in Process 40,000 Total Units to account for: 45,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 39,000 Ending Work in Process 6,000 Total Units to be accounted for: 45,000 Reqa: material in the beginning of the process Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 39,000 100% 39,000 Ending Work in Process 100% 6,000 25% 1,500 Total Equivalent units 45,000 40,500 Req-b: material at the end of the period Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 39,000 100% 39,000 Ending Work in Process 0% 0 25% 1,500 Total Equivalent units 39,000 40,500 Req-c: 75% added in beginning annd rest at 50% completion Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 39,000 100% 39,000 Ending Work in Process 75% 4,500 25% 1,500 Total Equivalent units 43,500 40,500 Case-3 UNITS TO ACCOUNT FOR: Beginning Work in Process units 9,000 Add: Units Started in Process 30,000 Total Units to account for: 39,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 29,000 Ending Work in Process-50% 5,000 Ending Work in Process-25% 5,000 Total Units to be accounted for: 39,000 Reqa: material in the beginning of the process Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 29,000 100% 29,000 Ending WIP-50% 100% 5,000 50% 2,500 Ending Work in Process-25% 100% 5,000 25% 1,250 Total Equivalent units 39,000 32,750 Req-b: material at the end of the period Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 29,000 100% 29,000 Ending Wip-50% 0% 0 50% 2,500 Ending Work in Process-25% 0% 0 25% 1,250 Total Equivalent units 29,000 32,750 Req-c: 75% added in beginning annd rest at 50% completion Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 29,000 100% 29,000 ending Wip-50% 100% 5,000 50% 2,500 Ending Work in Process-25% 75% 3,750 25% 1,250 Total Equivalent units 37,750 32,750 CASE-1 CASE-2 CASE-3 a. Material 5000 45000 39000 a. labour and overheads 4500 40500 32750 b. material 3000 39000 29000 b. Labour and overheads 4500 40500 32750 c. material 5000 43500 37750 c. Labour and overheads 4500 40500 32750
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