Question

A1 Co. has a process costing system. All materials are added when the process is first begun. At the beginning of May, there were no units of product in process. During May, 67,000 units were started; 6,700 of these were still in process at the end of May and were 60% finished in terms of conversion. The equivalent units for material in May were:

Answer 1

Answer:

Total equivalent units of materials =67,000 units

Explanation:

Equivalent unit is computed as follows:

Equivalent units =Degree of completion × units of inventory

Fully worked = 67,000-6,700= 60,300

Closing inventory   = 6,700

Item                                               Equivalent unit

Fully worked     100%× 60,300=  60,300 units

Closing inventory =  100%× 6,700= 6,700 units

Total equivalent units                       67,000 units

Note that we used 100% as the degree of completion for materials because materials  required are always added at the beginning of the process