Question

Murray Chemical Company refines a variety of petrochemical products. These data are from the firm's Houston plant: Work-in-process inventory, September 1 Direct materials Conversion Units started in process during September Work-in-process inventory, September 30 Direct materials Conversion 4,680,000 gallons 50% completed 20% completed 5,060,000 gallons 3,260,000 gallons 40% completed 60% completed Required: 1. Compute the equivalent units of direct materials and conversion for the month of September using the weighted average method. 2. Compute the equivalent units of direct materials and conversion for the month of September using the FIFO method.

Answer 1

Requirement 1

	Material	Conversion
Equivalent Units of Production	7,784,000	8,436,000

Requirement 2

	Material	Conversion
Equivalent Units of Production	5,444,000	7,500,000

Working

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	6,480,000			100%	6,480,000	100%	6,480,000
Ending WIP	3,260,000			40%	1,304,000	60%	1,956,000
Total	9,740,000			Total	7,784,000	Total	8,436,000

.

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	4,680,000	50%	20%	50%	80%
Units introduced	5,060,000
Total units to be accounted for	9,740,000
Completed and Transferred unit	6,480,000	0%	0%	100%	100%
Ending WIP	3,260,000	0%	0%	40%	60%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	4,680,000	50%	2,340,000	80%	3,744,000
From units started/Introduced	1,800,000	100%	1,800,000	100%	1,800,000
Total	6,480,000		4,140,000		5,544,000
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	3,260,000	40%	1,304,000	60%	1,956,000
Total EUP	9,740,000		5,444,000		7,500,000