Question

The following information is available for the month of April from the First department of the Armque Corporation: Units Work in process, April 1 (50% complete) 90,000 Started in April 250,000 Work in process, April 30 (40% complete) 60,000 Materials are added in the beginning of the process in the First department. Using the average cost method, what are the equivalent units of production for the month of April

Answer 1

Answer:

Direct Materials = 340,000

Direct Labor       = 304,000

Explanation:

The concept of equivalent units measures the number of units to the extend of completion  of inputs added to outputs during the production.

The first step is to determine the units completed and transferred.

units completed and transferred = opening work in process + started during the year - closing work in process

                                                      = 90,000 + 250,000 - 60,000

                                                      = 280,000

then determine the equivalent units of production with respect to direct materials and conversion costs.

Direct Materials

Note : Materials are added in the beginning of the process thus 100 % in all categories.

units completed and transferred (280,000 × 100%) = 280,000

units of closing work in process (60,000 × 100%)    =   60,000

Total                                                                             =  340,000

Conversion Cost

units completed and transferred (280,000 × 100%) = 280,000

units of closing work in process (60,000 × 40%)    =     24,000

Total                                                                             =  304,000