Answer:
Equivalent units
a) Weighted average = 523,200 units
b) FIFO = 480,000 units
Explanation:
<em>FIFO Method.</em>
<em>Fully worked units</em><em>: These represent units of inventory that were started in a current period and completed that same period. The fully worked units are calculated in order to separate the opening inventory from the the newly introduced when accounting for completed units under the FIFO.</em>
For magic company , fully worked units is
= 480,000 - 72,000 = 408,000 units
Equivalent units using Weighted Average
<em>Here, there are no distinction between opening inventory and the newly introduced</em>.
<em> Equivalent Units</em>
Completed unit (100%× 480,000) = 480,000
Closing inventory (60% × 72,000) = <u> 43,200</u>
Total equivalent units <u>523,200</u>
Equivalent Units using FIFO
Item <em>Equivalent Units</em>
Opening inventory (40% × 72,000) = 28,800
Fully worked (100%× 408,00) = 408,000
Closing inventory (60% × 72,000) = <u> 43,200</u>
Total equivalent units <u>480,000 </u>
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Equivalent units
a) Weighted average = 523,200 units
b) FIFO = 480,000 units
