FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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?

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Equivalent units for direct material and conversion costs are computed under process costing method.

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.

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