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28 June, 05:50

A first-in, first-out (FIFO) process cost system is used to account for the cost of producing a chemical compound. As part of production, Material B is added when the goods are 80% complete. Beginning work-in-process inventory for the current month was 20,000 units, 90% complete. During the month, 70,000 units were started in process, and 65,000 of these units were completed. There were no lost or spoiled units. If the ending inventory was 60% complete, the total equivalent units for Material B for the month was

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  1. 28 June, 08:47
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    Total Equivalent Units Material B: 65,000 units

    Explanation:

    Beginning WIP Material B: 20,000 units (20,000 x 100% * because WIP is more than 80% completed)

    Units Completed Material B: 85,000 units (20,000 + 65,000)

    Ending WIP Material B: 0 units (25,000 x 0%) * because ending WIP is less than 80% materials were not added yet.

    Equivalent Units of Production (FIFO) : Units Completed and Transferred Out + Equivalent Units in ending WIP - Equivalent Units in Beginning WIP

    EUP Material B: 85,000 + 0 - 20,000 = 65,000
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