170,913 views
9 votes
9 votes
Stone Corporation Stone Corporation adds material at the start to its production process and has the following information available for August:

Beginning Work in Process Inventory
(40% complete as to conversion) 7,000 units
Started this period 32,000 units
Ending Work in Process Inventory
(25% complete as to conversion) 2,500 units
Transferred out ?

Refer to Stone Corporation. Calculate equivalent units of production for material using FIFO.

a. 37,125
b. 32,000
c. 36,800
d. 39,000

User Subhashis
by
3.0k points

1 Answer

28 votes
28 votes

Answer:

Option B

Equivalent units =32,000 units

Step-by-step explanation:

Equivalent units are notional whole units which represent incomplete work and are used to apportion production costs between work in progress and finished work.

The equivalent units of material = degree of completion × units

Equivalent unit of materials

Item Units Workings Equivalent unit

opening inventory 7000 0%× 7000 0

Fully worked 29,500 100% × 29500 29,500

Closing inventory 2,500 100%× 2500 2,500

Total equivalent units of materials 39,000

Notes

1. Degree of completion for opening inventory is 100%-100%= 0%. Remember that materials are added at the beginning; so the material content for the opening inventory has already been completed added in the previous period i.e July

2. Fully work represent the units of inventory introduced in the current period and completed in the same period. Meaning 100% work was achieved in the period. it is equal to the units introduced = 32,000 - 2500 =29500

3. Closing work in progress material content will be is 100% completed. This represent work started this period but not yet completed.

Equivalent units for the month of August for materials = 0 + 29500 + 2500= 32,000 units

Equivalent units =32,00o units

User Wierzbiks
by
2.5k points