Question

RSTN Co. produces its product through two sequential processing departments. Direct materials and conversion are added to the product evenly throughout the process. The company uses monthly reporting periods for its process costing system. During October, the company finished and transferred 150,000 units of its product to Department 2. Of these units, 30,000 were in process at the beginning of the month and 120,000 were started and completed during the month. The beginning work in process inventory was 30% complete. At the end of the month, the work in process inventory consisted of 20,000 units that were 80% complete.
Required:
Compute the number of equivalent units of production for October. Use the FIFO method.

Answer 1

Answer:

RSTN Co.

The number of equivalent units of production for October are:

                                                        Materials              Conversion

Equivalent units of production       140,000                   157,000

Explanation:

a) Data and Calculations

                                                 Units         Materials              Conversion

Beginning work in process      30,000        100%                         30%

Units started and completed 120,000        100%                        100%

Ending work in process          20,000         100%                         80%

Equivalent units using FIFO method:

                                                 Units         Materials              Conversion

Beginning work in process      30,000        0 (0%)                 21,000 (70%)

Units started and completed 120,000 120,000 (100%)       120,000 (100%)

Ending work in process          20,000   20,000 (100%)         16,000 (80%)

Equivalent units of production             140,000                   157,000