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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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During July, Faust Manufacturing started and completed 80,000 units. In BWIP, there were 25,000 units, 20% complete. In EWIP, there were 25,000 units, 80% complete. Using FIFO, the equivalent units are

  1. a. 80,000 units.
  2. b. 120,000 units.
  3. c. 65,000 units.
  4. d. 85,000 units.
  5. e. 100,000 units.

To determine

Identify equivalent units using FIFO method.

Explanation

Equivalent Units of Production:

The total units of finished goods along with those goods that are not fully complete are known as equivalent units of production. In other words, equivalent units of production measures both completed and nearly completed units.

b.

Use the following formula to calculate equivalent units:

Equivalent units=(Units started and completed+Units in BWIP+Units in EWIP)=(80,000 units+(25,000 units×0.2)+(25000 units×0

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