Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 20, Problem 14QS
To determine

Concept Introduction:

Equivalent Units of Production:

The equivalent units of production can be defined as the units which are partially completed to be counted as fully completed units based on their percentage of work done on them.
For example, the units in ending inventory are 1,000 units and 60 % completed. Thus, the equivalent units for ending inventory will be = 1,000 units X 60 % = 600 units.

First-in, first-out (FIFO):

In FIFO method of inventory, the cost of goods sold and ending inventory are valued at the older prices. The cost of goods sold are valued at the older prices and the inventory which remains unsold are with the newest prices. This method says that, the inventory first purchased is first sold the ending inventory consists of the latest purchases.

To calculate:

The assembly department's equivalent units of production for materials and for conversion for November using FIFO method.

Expert Solution & Answer
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Answer to Problem 14QS

Solution:

    Equivalent units of Production for November

    Materials
    Conversion
    Equivalent Units
    10,200 units
    9,100 units

Explanation of Solution

The equivalent units of production for Materials and Conversion for can be calculated as under −
First, units added and completed 100 % from the process will be calculated.
  Units added and completed 100 % = Units transferred out  Beginning inventory units

Given,

  • Units transferred out = 9,000 units
  • Beginning inventory units = 2,000 units
  •   Units added and completed 100 % = Units transferred out  Beginning inventory unitsUnits added and completed 100 % = 9,000 units  2,000 unitsUnits added and completed 100 % = 7,000 units

Out of total units transferred, 7,000 units were added and completed and transferred out during the process.

Equivalent units of production as FIFO method will be calculated as under −

    Equivalent units of production -FIFO
    Direct MaterialsConversion
    Units to complete - Beginning Inventory


    Direct Materials (2,000 X 40%)
    800

    Conversion (2,000 X 60 %)

    1,200
    Units completed and transferred out
    7,000
    7,000
    Units completed - Ending Inventory


    Direct Materials (3,000 X 80%)
    2,400

    Conversion (3,000 X 30%)

    900
    Equivalent units of production10,2009,100

The above calculations can be explained as under −
For beginning inventory

Given,

Units in beginning inventory = 2,000 units

  • For direct material completed percentage = 60 %
  • For conversion completed percentage = 40 %
  •    Equivalent units for Beginning inventory= Units in beginning inventory X(1 percent of completion) Units to be counted from beginning inventory for materials −
      Equivalent units= 2,000 units X ( 1  60%)Equivalent units= 2,000 units X 40 %Equivalent units= 800 units

    Units to be counted from beginning inventory for conversion −
      Equivalent units=2,000 units X ( 1  40%)Equivalent units=2,000 units X 60 %Equivalent units=1,200 units

    For units added, completed and transferred out −
    7,000 units calculated as above
    For ending inventory

    Given,

    Units in ending inventory = 3,000 units

  • For direct material completed percentage = 80 %
  • For conversion completed percentage = 30 %
  •   Equivalent units for ending inventory = Units in beginning inventory X Percent of completion

    Equivalent units for ending inventory for materials −
      Units to be counted as completed = 3,000 units X 80%Units to be counted as completed = 2,400 units

    Equivalent units for ending inventory for conversion −
      Equivalent units = 3,000 units X 30 %Equivalent units  = 900 units 

    Total equivalent units for production for materials and conversion will be calculated as under −
      Total equivalent units for production = Beginning equivalent units + Completed and transferred                                                               + Ending equivalent units

    Given,
    For materials −

    • Beginning equivalent units = 800 units
    • Completed and transferred = 7,000 units
    • Ending equivalent units = 2,400 units
    •   Total equivalent units for production = 800 units + 7,000 units + 2,400 units Total equivalent units for production = 10,200 units

    For conversion −

    • Beginning equivalent units = 1,200 units
    • Completed and transferred = 7,000 units
    • Ending equivalent units = 900 units
    •   Total equivalent units for production = 1,200 units + 7,000 units + 2,400 units Total equivalent units for production = 9,100 units

    Conclusion

    Thus, the assembly department's equivalent units of production for materials and for conversion for November using FIFO method have been calculated.

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    Chapter 20 Solutions

    Connect Access Card For Fundamental Accounting Principles

    Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Companies such as Apple commonly prepare a process...Ch. 20 - Prob. 15DQCh. 20 - Prob. 16DQCh. 20 - Prob. 17DQCh. 20 - How could a company manager use a process cost...Ch. 20 - Explain a hybrid costing system. Identify' a...Ch. 20 - Prob. 1QSCh. 20 - Prob. 2QSCh. 20 - Process vs. job order operations C1 For each of...Ch. 20 - Physical flow reconciliation C2 Prepare a physical...Ch. 20 - Prob. 5QSCh. 20 - A FIFO: Computing equivalent units C4 Refer to QS...Ch. 20 - Prob. 7QSCh. 20 - Prob. 8QSCh. 20 - Prob. 9QSCh. 20 - Prob. 10QSCh. 20 - Prob. 11QSCh. 20 - Prob. 12QSCh. 20 - Prob. 13QSCh. 20 - Prob. 14QSCh. 20 - Prob. 15QSCh. 20 - Prob. 16QSCh. 20 - A FIFO: Journal entry to transfer costs P4 Refer...Ch. 20 - Prob. 18QSCh. 20 - Weighted average: Assigning costs to output C3...Ch. 20 - Prob. 20QSCh. 20 - Prob. 21QSCh. 20 - Prob. 22QSCh. 20 - Recording costs of materials P1 Hotwax mates...Ch. 20 - Prob. 24QSCh. 20 - Recording costs of factory overhead P1 P3 Prepare...Ch. 20 - Recording transfer of costs to finished goods P4...Ch. 20 - Exercise 20-1 Process vs. job order operations C1...Ch. 20 - Exercise 20-2 Comparing process and job order...Ch. 20 - Prob. 3ECh. 20 - Prob. 4ECh. 20 - Prob. 5ECh. 20 - Prob. 6ECh. 20 - Prob. 7ECh. 20 - Exercise 20-8 Weighted average: Computing...Ch. 20 - Prob. 9ECh. 20 - Prob. 10ECh. 20 - Prob. 11ECh. 20 - Prob. 12ECh. 20 - Exercise 20-13A FIFO: Completing a process cost...Ch. 20 - Exercise 20-14 Production cost flow and...Ch. 20 - Exercise 20-15 Recording product costs P1 P2 P3...Ch. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Prob. 19ECh. 20 - Prob. 20ECh. 20 - Prob. 21ECh. 20 - Exercise 20-22 Recording costs of labor P2 Prepare...Ch. 20 - Prob. 23ECh. 20 - Prob. 24ECh. 20 - Exercise 20-25 Recording cost flows in a process...Ch. 20 - Exercise 20-26 Interpretation of journal entries...Ch. 20 - Prob. 1APSACh. 20 - Prob. 2APSACh. 20 - Prob. 3APSACh. 20 - Problem 20-4A Weighted average: Process cost...Ch. 20 - Problem 20-5AA FIFO: Process cost summary:...Ch. 20 - Prob. 6APSACh. 20 - Prob. 7APSACh. 20 - Prob. 1BPSBCh. 20 - Prob. 2BPSBCh. 20 - Prob. 3BPSBCh. 20 - Prob. 4BPSBCh. 20 - Problem 20-5BA FIFO: Process cost summary;...Ch. 20 - Problem 20-6BAFIFO: Costs per equivalent unit;...Ch. 20 - Problem 20-7BA FIFO: Process cost summary,...Ch. 20 - Prob. 20SPCh. 20 - Prob. 20CPCh. 20 - Prob. 1GLPCh. 20 - Apple has entered into contracts that require the...Ch. 20 - Apple and Google work to maintain high-quality and...Ch. 20 - Prob. 3AACh. 20 - Prob. 1BTNCh. 20 - Prob. 2BTNCh. 20 - Many companies use technology to help them improve...Ch. 20 - Prob. 4BTNCh. 20 - Prob. 5BTNCh. 20 - Prob. 6BTN
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