Question

A company uses a process cost accounting system. Its Sewing Department's beginning inventory consisted of 50,000 units (1/4 complete with respect to direct labor and overhead). The Sewing Department started and finished 120,000 units this period. Its ending inventory consists of 40,000 units (1/4 complete with respect to direct labor and overhead). All direct materials are added at the beginning of the process. Under FIFO what are the equivalent units of production for the Sewing Department for direct materials and for direct labor and overhead, respectively?A. 210,000;120,000B. 210,000; 180,000C. 167,500; 167,500D. 160,000; 162,500E. 160,000; 167,500

Answer 1

Answer:

E. 160,000; 167,500

Explanation:

$started \: and \: completed \\ + unfinished \: beginning\\ + ending$

Direct Materials

Started and complete 120,000

We also need to add the ending WIP which count entirely because the materials are added completely.

The beginning WIP has materials added completely already. It required no extra work.

120,000 +40,000 =160,000

Conversion

Started and complete 120,000

ending WIP 40,000 x 1/4 = 10,000

beginning WIP 50,000 X3/4 = 37,500

total 167,500

we add the ending WIP

and the unfinished beginning WIP

it has 1/4 completed so 3/4 are unfinished