The Finishing Department of Berle Industries works on only one product, and all

Question

The Finishing Department of Berle Industries works on only one product, and all costs are incurred uniformly while these units remain in the department. On March 1, 6,000 units were in process that were 45% completed. An additional 60,000 units were transferred into the Finishing Department during March. At March 31, there were 25,000 units in process that were 75% completed. Compute the equivalent full units of production for the Finishing Department during March using the FIFO method.

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Explanation / Answer

Using FIFO we assume that the 6,000 initial units were completed and left the shop so to account for those we need to multiply the number of units by 55% (the amount of work left to be completed in March); this gives us 3,300 EU. Next we need to take the 25,000 units left at the end of the month and multiply them by 75% (the portion of work we finished in March); which yields 18,750 EU. Finally, the 25,000 units left in progress is subtracted from the 60,000 that was started during the month to find the 35,000 units that we took through from start to finish. All together then our EU count for the production of the Finishing Department for the month of March can be found by adding our components of 3,300, 18,750, and 35,000 giving us a final count of 57,050 EU.

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