Question

Magic Company adds materials at the beginning of the process in Department A. The follow- ing information on physical units for Department A for the month of August is available:

Work in process, August 1 (60% complete with respect to conversion)= 72,000
Started in August= 480.000
Completed= 480.000
Work in process, August 31 (30% complete with respect to conversion)= 72,000
Required; A)Compute the equivalent units for materials costs and for conversion costs using the weighted-average method.
B) Compute the equivalent units for materials costs and for conversion costs using the FIFO method.

Answer 1

To compute the equivalent units for materials costs and conversion costs, you can use the weighted-average or FIFO method.

Step-by-step explanation:

To compute the equivalent units for materials costs and conversion costs using the weighted-average method, we need to consider the units that were started and completed in August, as well as the units still in process at the end of August. For materials costs, we can use the total units started and completed in August. For conversion costs, we need to take into account the units started in August, units completed in August, and the units still in process at the end of August.

To compute the equivalent units for materials costs and conversion costs using the FIFO method, we only consider the units started and completed in August. We do not include the units in process at the end of August.