Accounting 4B 1. The following data are available for BITCO\'s manufacturing act

Question

Accounting 4B 1. The following data are available for BITCO's manufacturing activities using FO Chapter 16 Qui FitoFall 18 Beginning goods in process inventory Units started and completed 5,000 units, 1/4 of the labor added this period 15,000 Ending goods in process inventory 6,000 units,1/2 of the labor added this period If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively A) 16,250, 19,250 B) 16,250; 21,750 C) 21,000; 19,250. D) 19,250; 18,750 E) 21,000; 22,250. 2 STEPHCO's beginning work in process inventory consisted of 20,000 units that were 1/5 complete with respect to direct labor. These beginning units were completed and another 90,000 units were started during the current period. Of those started, 60,000 were finished and the remaining 30,000 were 1/3 complete at the end of the period. The equivalent units of production were: A) 60,000.00 B) 86,000.00 C) 76,000.00 D) 74,000.00 E) 96,000.00 At the beginning of the recent period, there were 900 units of product in a department, one-third completed. These units were finished and an additional 5,000 units were started and completed during the period. 800 units were still in process at the end of the period, one-fourth completed. Using the weighted average method, the equivalent units produced by the department were: 3. A) 6,700 units. B) 5,800 units. c) 5,900 units. D) 5,500 units. E) 6,100 units. Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment? A) In most manufacturing environments, it is not possible to conduct a physical count of units B) Companies often use a combination of a process costing and job order costing systems C) In most process costing systems, direct materials are added at the beginning of the process 4. while conversion costs are added evenly throughout the manufacturing process All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period. In most cases, there is no difference between physical units and equivalent units of production. D) E)

Explanation / Answer

Solution 1:

Equivalent units for direct material = Beginning inventory *0% + units started and completed *100% + ending Inventory * 100%

= 5000*0% + 15000*100% + 6000*100% = 0 + 15000 + 6000 = 21,000 units

Equivalent units for direct labor = Beginning inventory * added during this period + units started and completed *100% + ending Inventory * added during this period

= 5000 *1/4 + 15000 *100% + 6000 *1/2 = 1250 + 15000 + 3000 = 19,250 units

Hence option "C" is correct.

Solution 2:

Equivalent units of production = Beginning inventory * ratio completed during this period+ units started and completed *100% + ending Inventory * ratio completed during this period

= 20000 *4/5 + 60000*100% + 30000 * 1/3 = 16000 + 60000 + 10000 = 86,000 units

Hence, option "B" is correct.

Solution 3:

Equivalent units produced = total units completed *100% + ending inventory * ratio Completed during this period

=(900 + 5000) * 100% + 800 *1/4 = 5900 + 200 = 6100 units

Hence option "E" is correct.

Solution 4:

Best explanation for why it is necessary to calculate equivalent units of production in a process costing environment is that " All of the work to make a unit 100% complete and ready to move to the next stage of production or to the finished goods inventory may not have been completed in a single time period".

Hence option "D" is correct.

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