Question

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 2,680 liters in beginning work in process inventory (30% complete). During the period 58,970 liters were completed. The ending work in process was 6,610 liters (70% completed). All inventories are costed by the first-in, first-out method. What is the total equivalent units for direct materials (using the FIFO method) if materials were added at the beginning of the process?

Please Help Me!! I do not understand this question.

2680*30% = 804 1876 58970 * 100% = 58970 58970 6610 * 70% = 4627 1983 64401

Answer 1

Equivalent units for material are 62900 Units

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	2,680	100%	30%	0%	70%
Units introduced	62,900
Total units to be accounted for	65,580
Completed and Transferred unit	58,970	0%	0%	100%	100%
Ending WIP	6,610	0%	0%	100%	70%

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	2,680	0%	-	70%	1,876
From units started/Introduced	56,290	100%	56,290	100%	56,290
Total	58,970		56,290		58,166
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	6,610	100%	6,610	70%	4,627
Total EUP	65,580		62,900		62,793

In using FIFO method it is assumed that the units in beginning inventory are finished at first and then the new units added are manufactured and completed.

If material is added at beginning then it means beginning units are already completed for material.