Department R had 5,000 units in work in process that were 75% completed as to la
ID: 2479659 • Letter: D
Question
Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period; 30,000 units of direct materials were added during the period; 32,000 units were completed during the period; and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was,,, 29,450 31,950 32,450 26,000
Explanation / Answer
Equivalent units under FIFO method are calculated using the following formula:
Equivalent units for each cost component
= (100% A) × B + C + D × E
Where,
A = percentage of completion at the end of last period
B = units in opening work in process
C = units started and completed in current period
=30000-3000=27000
D = percentage of completion of units in closing work in process
E = units in closing work in process
Equivalent units for each cost component
= (100% 75%) × 5000 + 27000 + 40% × 3000
=29450
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