Question

The following production data were taken from the records of the Finishing Department for July: Inventory in process, July 1, 40% completed 4,000 units Transferred to finished goods during July 37,500 units Ending work in process during July, 20% completed 3,500 units Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories. Assume that all direct materials are placed in the process at the beginning of production.

Answer 1

37,000 units

Step-by-step explanation:

The computation of the total equivalent units for direct material is shown below:

= Transferred to finished goods during the month of July + Ending work in process during the month of July - Inventory in process as on July 1

= 37,500 units + 3,500 units - 4,000 units

= 41,000 units - 4,000 units

= 37,000 units

We simply used the above formula so that the total equivalent units for direct materials using the FIFO method could come