Question

Umbrella Corporation’s production cycle starts in Department A. All Materials are added at the beginning of the process, and conversion costs are added evenly during the process. The following info is available for July:

Work-in-Process, July 1 (20% complete for conversion)--------------------------$50,000 units

Units started in July-------------------------------------------------------------------------240,000 units

Work-in-Process, July 31 (10% complete for conversion) --------------------------30,000 units

1. What are the equivalent units of production for materials using FIFO?

1. 240,000
2. 260,000
3. 275,000
4. 290,000

2. What are the equivalent units of production for conversion costs, using FIFO?

1. 253,000
2. 273,000
3. 214,000
4. 223,000

Notes:

• Please explain in detail how you would arrive with 240,000 EU in materials.
• Please explain in detail how you would arrive at 253,000 EU in conversion.
• What are the distinct differences between units to be accounted for and units accounted for?
• How do you find units started and completed?
• Please provide your explanations on computer if possible, as handwritten answers are difficult to read.
• This is a created example that does not fall under any copyright violations within the Chegg honor code.

Answer 1

Answer 1:

Correct answer is:

a. 240,000

Explanation:

First let us do the quantity schedule:

Calculation of Equivalent Units of production of material and conversion under FIFO method:

As such option a is correct and other options b, c, and d are incorrect.

Answer 2:

Correct answer is:

a. 253,000

Explanation:

The calculation of equivalent units of production (EUP) for conversion is also given in answer a (please see table) above.

EUP for conversion as calculated = 253,000

As such option a is correct and other options b, c, and d are incorrect.

Requirement given in Notes:

Details of calculations of EUP for material and conversion are given in answer a above.

In 1st table given in answer a, the quantity schedule is given. The difference between units to be accounted for and units accounted for is balancing figure of 260,000. This gives the units 'completed and transferred'

We find units started, from information as given in the question.

We derived 'units completed' as balancing figure as shown in 1st table in answer a above.