Question

Exercise 5S-1 Computation of Equivalent Units of Production-FIFO Method [LO5S-6]Clonex Labs, Inc., uses the FIFO method in its process costing system. The following data are available for one department for October: Percent Completed UnitsMaterialsConversionWork in process, October 130,00065%30%Work in process, October 3115,00080%40% The department started 175,000 units into production during the month and transferred 190,000 completed units to the next department. Required:Compute the equivalent units of production for materials and conversion for October.

Answer 1

Equivalent units of materials 197,500

Equivalent units of conversion 202,000

Step-by-step explanation:

Fully work represent units started and completed in the same period. They exclude the opening inventory.

Fully worked = 190,000- 15,000 =175,000.

Note also at that the degree of completion for opening inventory is the simply the balance of work remaining to be done.

For example, for materials, 65% of work has been done on the opening inventory in the last period, hence the balance of 35% would be done this period

Items Units Equivalent unit

Opening WIP 30,000 30,000 × 35% = 10500

Fully worked 175 ,000 175 ,000 × 100%= 175,000

Closing inventory 15,000 15,000 × 80%= 12000

Equivalent unit of materials 197,500

Conversion cost

Opening WIP 30,000 30,000 × 70% = 21000

Fully worked 175 ,000 175 ,000 × 100%= 175,000

Closing inventory 15,000 15,000 × 40%= 6000

Equivalent unit of conversion 202,000