Question

The following production data were taken from the records of the Finishing Department for July: Inventory in process, March 1, 30% completed 4,000 units Transferred to finished goods during March 38,500 units Ending work in process during March, 40% completed 3,500 units Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories. Assume that all direct materials are placed in process at the beginning of production.a. 39,400 units
b. 36,600 units
c. 37,000 units
d. 41,000 units

Answer 1

Answer:

All options are incorrect.

Correct answer is 39,900

Explanation:

As for the provided information:

We can firstly compute the goods added new during the month,

But as there is first in first out the opening will be converted first and then the added ones, accordingly the total converted units into finished goods will comprise the units added and opening work in process,

Thus, goods newly added shall not be computed.

Therefore, goods 100% complete = 38,500 units

Further closing units are 40% complete, as not provided specifically in terms of overheads and raw material.

Thus, assumed material also 40% complete

Therefore, in closing equivalent completed units for direct material = 3,500 $\times$ 40% = 1,400 units

Therefore, total equivalent units = 38,500 + 1,400 = 39,900

Although if assumed that goods are 100% complete with respect to materials, then total equivalent units = 38,500 + 3,500 = 42,000

Therefore, all the options provided are incorrect.

Correct answer is 39,900