Question

A first-in, first-out (FIFO) process cost system is used to account for the cost of producing a chemical compound. As part of production, Material B is added when the goods are 80% complete. Beginning work-in-process inventory for the current month was 20,000 units, 90% complete. During the month, 70,000 units were started in process, and 65,000 of these units were completed. There were no lost or spoiled units. If the ending inventory was 60% complete, the total equivalent units for Material B for the month was

Answer 1

Total Equivalent Units Material B: 65,000 units

Step-by-step explanation:

Beginning WIP Material B: 20,000 units (20,000 x 100% * because WIP is more than 80% completed)

Units Completed Material B: 85,000 units (20,000 + 65,000)

Ending WIP Material B: 0 units (25,000 x 0%) * because ending WIP is less than 80% materials were not added yet.

Equivalent Units of Production (FIFO): Units Completed and Transferred Out + Equivalent Units in ending WIP - Equivalent Units in Beginning WIP

EUP Material B: 85,000 + 0 - 20,000 = 65,000