The Rolling Department of Oak Ridge Steel Company had 2,900 tons in beginning work in process inventory (70% complete) on July 1. During July, 48,700 tons were completed. The ending work in process inventory on July 31 was 2,400 tons (60% complete). What are the total equivalent units for direct materials for July if materials are added at the beginning of the process?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
The Rolling Department of Oak Ridge Steel Company had 2,900 tons in beginning work in process inventory (70% complete) on July 1. During July, 48,700 tons were completed. The ending work in process inventory on July 31 was 2,400 tons (60% complete).
What are the total equivalent units for direct materials for July if materials are added at the beginning of the process?
It is given that the beginning inventory units are 2,900 tons, during July total completed units are 48,700, and the ending inventory units on 31st July is 2,400 tons.
As the direct materials are added at the beginning of the process hence, the work done percentage for it in completed units and ending inventory units would be equal to 100%.
Compute the total equivalent units for direct materials as follows: -
Total Equivalent Units = Equivalent units for Completed units + Equivalent Units for Ending Inventory
= (Computed units x Percentage of Work Done) + (Ending Inventory Units x Percentage of Work Done)
= (48,700 x 100%) + (2,400 x 100%)
Total Equivalent Units = 51,100
The equivalent units for direct materials are 51,100.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
