Calculating equivalent units
Cortez Chemical Co. uses an average cost processing system. All materials are added at the start of the production process. Labor and overhead are added evenly at the same rate throughout the process. Cortez’s records indicate the following data for May:
Beginning work in process, May 1 (50% completed) . . . . . . . . . . . . . 1,000 units
Started in May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 units
Completed and transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 units
Ending work in process, on May 31, is 75% completed as to labor and factory overhead. Make the following calculations:
a. Equivalent units for direct materials
b. Equivalent units for labor and overhead
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