Loose Leaf for Fundamental Accounting Principles
Loose Leaf for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259687709
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
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
Check Mark

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 Materials Conversion
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 production 10,200 9,100

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

Loose Leaf for Fundamental Accounting Principles

Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 15DQCh. 20 - Prob. 16DQCh. 20 - Prob. 17DQCh. 20 - Prob. 1QSCh. 20 - Prob. 2QSCh. 20 - Prob. 3QSCh. 20 - Prob. 4QSCh. 20 - Prob. 5QSCh. 20 - Prob. 6QSCh. 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 - Prob. 17QSCh. 20 - Prob. 18QSCh. 20 - Prob. 19QSCh. 20 - Prob. 20QSCh. 20 - Prob. 21QSCh. 20 - Prob. 22QSCh. 20 - Prob. 23QSCh. 20 - Recording costs of labor P2 Prepare journal...Ch. 20 - Prob. 25QSCh. 20 - Prob. 26QSCh. 20 - Prob. 27QSCh. 20 - Prob. 1ECh. 20 - Prob. 2ECh. 20 - Prob. 3ECh. 20 - Prob. 4ECh. 20 - Prob. 5ECh. 20 - Prob. 6ECh. 20 - Prob. 7ECh. 20 - Prob. 8ECh. 20 - Prob. 9ECh. 20 - Prob. 10ECh. 20 - Prob. 11ECh. 20 - Prob. 12ECh. 20 - Prob. 13ECh. 20 - Prob. 14ECh. 20 - Prob. 15ECh. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Exercise 20-19 Production cost flows P1 P2 P3 P4...Ch. 20 - Exercise 20-20 Weighted average: Process cost...Ch. 20 - Exercise 20-21 Recording costs of...Ch. 20 - Prob. 22ECh. 20 - Prob. 23ECh. 20 - Exercise 20-24 Recording cost of completed...Ch. 20 - Prob. 25ECh. 20 - Prob. 26ECh. 20 - Prob. 27ECh. 20 - Prob. 1APSACh. 20 - Prob. 2APSACh. 20 - Prob. 3APSACh. 20 - Prob. 4APSACh. 20 - Prob. 5APSACh. 20 - Prob. 6APSACh. 20 - Prob. 7APSACh. 20 - Prob. 1BPSBCh. 20 - Prob. 2BPSBCh. 20 - Prob. 3BPSBCh. 20 - Prob. 4BPSBCh. 20 - Prob. 5BPSBCh. 20 - Prob. 6BPSBCh. 20 - Prob. 7BPSBCh. 20 - Prob. 20SPCh. 20 - Prob. 20CPCh. 20 - Prob. 1GLPCh. 20 - Prob. 1BTNCh. 20 - Prob. 2BTNCh. 20 - Prob. 3BTNCh. 20 - Prob. 4BTNCh. 20 - Prob. 5BTNCh. 20 - Prob. 6BTNCh. 20 - This chapter's opener featured Jeff Keari and his...Ch. 20 - Prob. 8BTNCh. 20 - Prob. 9BTN
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