Alaskan Fisheries, Inc., processes salmon for various distributors. Two departme

Question

Alaskan Fisheries, Inc., processes salmon for various distributors. Two departments are involved— Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:

Percent Completed

A total of 470,000 pounds of salmon were started into processing during July. All materials are added at the beginning of processing in the Cleaning Department.

Percent Completed

Pounds of
Salmon Materials Labor and
Overhead   Work in process inventory, July 1 32,000 100% 57%   Work in process inventory, July 31 22,000 100% 80%

Explanation / Answer

Total equivalent units for a cost component = A + B × C

Where
A = units transferred out to the next department/finished goods
B = units in closing work in process
C = percentage of completion with respect to the relevant cost component

..

Solution

Total equivalent units–direct materials = 470,000 + 22,000 × 100% = 492,000 units

Total equivalent units–conversion costs (Labor&OH) = 470,000 + 22,000 × 80% = 487,600 units

Units in opening work in process 32,000 Units added 470,000 Units transferred out 480,000 Units in closing work in process 22,000 % of completion of closing WIP–direct materials 100% % of completion of closing WIP–conversion costs(Labor &OH) 80%

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