Question

L01, L04 Assume each of the following conditions concerning the data given: 1. All materials are added at the beginning of the process. 2. All materials are added 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, but ignore that fact for purposes of this solution.) 3. Half of the materials are added at the beginning of the process, and the balance of the materials is added when the units are three-fourths completed In all cases, labor and factory overhead are added evenly throughout the process. Units Dept. 1 Dept. 2 3,000 1.500 Dept. 3 1.200 Production Summary Work in process, beginning of month Stage of completion..... Started in process. Finished and transferred Work in process, and of month Stage of completion....... 21,000 18.000 19.000 2,000 16,000 15.500 21.000 2.000 1,200 1. Compute separate equivalent units of production, one for materials and one forlabor and factory overhead, for each of the conditions listed, using (a) the weighted average cost method and (b) the FIFO cost method. 2. When would the equivalent units be the same under the weighted average costing method and the FIFO costing method? Critical Thinking Problem

Answer 1

At the beginning of process
	D1		D2		D3
FIFO	Materials	Conversion	Materials	Conversion	Materials	Conversion
Units from beginning WIP	1500	1500	600	750	240	600
Calculation	3000*(100%-50%)	3000*(100%-50%)	1500*(100%-60%)	1500*(100%-50%)	1200*(100%-80%)	1200*(100%-50%)
Units started & completed	16000	8000	14000	7000	19800	9900
Units in ending WIP	1500	1500	1000	1000	300	300
Calculation	2000*75%	2000*75%	2000*50%	2000*50%	1200*25%	1200*25%
Total Equivalent units	19000	11000	15600	8750	20340	10800
Weighted Average	D1		D2		D3
	Materials	Conversion	Materials	Conversion	Materials	Conversion
Units transferred to next department	19000	9500	15500	7750	21000	10500
Calculation		19000*50%		15500*50%		21000*50%
WIP, end of month	1500	1500	1000	1000	300	300
Calculation	2000*75%	2000*75%	2000*50%	2000*50%	1200*25%	1200*25%
Total Equivalent units	20500	11000	16500	8750	21300	10800