Question

Marlan Manufacturing produces a product that passes through two departments. The units from the molding department are completed in the assembly department. The units are completed in assembly by adding the remaining direct materials when the units are 60% complete with respect to conversion costs. Conversion costs are added proportionately in assembly. The production activity in the assembly department for the current month is presented as follows.Marlan uses the FIFO (first-in, first-out) inventory method in its process cost system.
Beginning inventory units (25% complete with respect to conversion costs) 8,000 Units transferred in from the molding department during the month 42,000 Units to account for 50,000 Units completed and transferred to finished goods inventory 38,000 Ending inventory units (40% complete with respect to conversion costs) 12,000 Units accounted for 50,000 The equivalent units for materials in Marlan’s assembly department for the current month are:

a. 30,000 units.
b. 38,000 units.
c. 50,000 units.
d. 42,000 units.

Answer 1

Answer:

correct option is b. 38,000 units.

Explanation:

we know as per FIFO method

equivalent units (EUP) =  Number of EUP to finish beginning WIP + Number of units started and completed + Nunmber of EUP start ending WIP    .......................1

as here number of units started and completed  is

number of units started and completed = 38,000 unit - 8,000 unit

number of units started and completed = 30,000

and The end of the WIP is not yet 60% complete, so no materials have been added for them

so here we get

equivalent units (EUP)  = 8000 + 30,000

equivalent units (EUP)  = 38000 units

so correct option is b. 38,000 units