Question

Lenning Corporation uses the FIFO method in its process costing. The following data pertain to its Assembly Department for August.

		Percent Complete
	Units	Materials		Conversion
Work in process, August 1	600	60	%	55	%
Units started into production during August	8,800
Units completed during August and transferred to the next department	7,800
Work in process, August 31	1,600	70	%	40	%

Required:

Compute the equivalent units of production for both materials and conversion costs for the Assembly Department for August using the FIFO method.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	8,560	8,110

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	600	60%	55%	40%	45%
Units introduced	8,800
Total units to be accounted for	9,400
Completed and Transferred unit	7,800	0%	0%	100%	100%
Ending WIP	1,600	0%	0%	70%	40%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	600	40%	240	45%	270
From units started/Introduced	7,200	100%	7,200	100%	7,200
Total	7,800		7,440		7,470
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	1,600	70%	1,120	40%	640
Total EUP	9,400		8,560		8,110