Question

East Bay Fisheries Inc. processes king salmon for various distributors. Two departments are involved – processing and packaging. Data relating to tons of king salmon processed in the processing department during June 2019 are provided below: Tons of Percent Completed King Salmon Materials Conversion 3,300 86 89 4,600 69 50 9,500 Work-in-process inventory – June 1 Work-in-process inventory June 30 Started processing during June Total equivalent units for materials under the FIFO method are calculated to be:

Answer 1

Under FIFO method, equivalent units would consist efforts required to complete the beginning inventory, efforts put for completed and transferred out goods and ending inventory. As the materials are introduced at the beginning itself, beginning inventory is 86% complete in terms of materials, 14% efforts would be required in current process or period whereas conversion costs would require the uncompleted portion of costs in current process or period. That is, it was complete 89% already and so 11% efforts would be required in current period. Units in beginning inventory Add: Units started during the period/process Less: Units in ending inventory Units completed and transferred out 3,300 9,500 -4,600 8,200 --> Of which 3300 units shall be from beg. inventory; Bal. 4900 units from current. Particulars Physical Units % Materials EUP- Materials Beginning work in process Started, Completed and transferred Transferred to next process Ending work in process Equivalent Units of Production (EUP) 3,300 4,900 8,200 4,600 12,800 14% 462 [3300 units x 14%] 100% 4,900 [4900 units x 100%] 5,362 69% 3,174 [4600 units x 69%] 8,536 --> Option-(a)