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25 July, 06:11

The Marshall Company has a process cost system. All materials are added when the process is first begun. At the beginning of September, there were no units of product in process. During September, 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent units of material in September were:

a. 40,000.

b. 45,000.

c. 48,000.

d. 50,000

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  1. 25 July, 10:07
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    c) 48,000 units

    Explanation:

    The question is to compute the equivalent units of materials in September for Marshall Company

    It is computed as follows:

    1) Beginning Equivalent Unit

    At the beginning, Units = 0, Percent completed = 0 and Equivalent unit = $0

    Equivalent Units Started ad Completed

    2) Started Units = 50,000 units

    Units still in process at the end of September = 5000 units

    Started and Completed = 50,000 - 5,000 = 45,000

    Since the Units completed is 45,000, it means 100% completed equivalent unit is 45,000

    3) Closing Equivalent Units

    In process = 5,000 units and percent completed is 3/5

    Equivalent unit is 3/5 x 5000 = 3000 units

    Finally, total equivalent units for conversion costs in September

    = 0 + 45,000 + 3,000

    =48,000 units
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