Question

Department R had 4,600 units in work in process that were 66% completed as to labor and overhead at the beginning of the period. During the period, 25,100 units of direct materials were added, 26,800 units were completed, and 2,900 units were 21% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of was

a.24,373
b.34,300
c.28,973
d.26,800

Answer 1

The reference information provided is about choosing a cost-effective production method and not about calculating equivalent units. At $100 per unit of labor, Method 1 is the most cost-effective. If labor costs increase to $200 per unit, Method 1 still remains the cheapest, though the difference in cost between Method 1 and Method 2 diminishes.

Step-by-step explanation:

The question is asking for the calculation of equivalent units in a production process using the first-in, first-out (FIFO) costing method. However, the details provided in the reference information do not align with the given scenario. Instead, they relate to making a cost-based decision on different production methods considering labor and capital costs. To calculate equivalent units using FIFO, we need to account for the work done on the opening inventory and the flow of units during the period. Unfortunately, without specific cost information related to the production process mentioned in the question, it is not possible to calculate equivalent units accurately.

Regarding the reference information, to find the best production method given the cost of labor and capital, one would calculate the total cost for each method and compare them. At the original cost of $100 per unit of labor and $400 per unit of capital, the cost for each method would be:

• Method 1: (50 units of labor x $100) + (10 units of capital x $400) = $9,000
• Method 2: (20 units of labor x $100) + (40 units of capital x $400) = $18,000
• Method 3: (10 units of labor x $100) + (70 units of capital x $400) = $29,000

The best production method initially is Method 1. If the cost of labor rises to $200 per unit, new calculations would be:

• Method 1: (50 units of labor x $200) + (10 units of capital x $400) = $14,000
• Method 2: (20 units of labor x $200) + (40 units of capital x $400) = $18,000
• Method 3: (10 units of labor x $200) + (70 units of capital x $400) = $29,000

With the increased labor cost, Method 1 still remains the cheapest, but the gap between Method 1 and 2 narrows significantly.