Answer:
1. Using the Weighted-average method
Total equivalent units of a cost product = A + B * C
Where:
A = units transferred to the next department or finished goods (completed)
B = units in work-in-progress at the closing time of time period
C = percentage of completion with respect to the product
Equivalent units of Direct materials = 5,580,000 + (3,090,000 × 40%) = 6,816,000 gallons.
Equivalent units of Conversion = 5,580,000 + (3,090,000 × 60%) = 7,434,000 gallons.
2. Using the FIFO method
Equivalent Units of Production = equivalent units to complete beginning inventory + units started and completed during the period + equivalent units in ending work in process inventory.
where;
Equivalent units to complete beginning inventory = units in beginning inventory × (100 percent − percentage completion of beginning inventory).
For Direct Materials;
Thus, Equivalent units to complete beginning inventory =
4,800,000 × (100 - 50%) = 2,400,000 gallons
Equivalent Units of Production = 2,400,000 + (5,580,000 × 40%) + 3,090,000 = 7,722,000 gallons
For Conversion;
Thus, Equivalent units to complete beginning inventory =
4,800,000 × (100 - 20%) = 960,000 gallons
Equivalent Units of Production = 960,000 + (5,580,000 × 60%) + 3,090,000 = 4,050,000 gallons
