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SECTIONA?TYPEQUESTIONS:SECTION1KAPLANPUBLISHING
71
Q242.
Vare produces various inks at its Normanton factory. Production details for Process 1 are as follows:Openingwork?in?progress,1April 400units 60%complete
Closingwork?in? progress, 30April 600units 20% complete
Units started 1,000
Units finished 800The degree of completion quoted relates to labour and overhead costs.Three?quarters of the materials are added at the start of the process and the remaining quarter added when the process is 50% complete. The company uses the FIFO method of cost allocation. What are the equivalent units of production for materials in the period?
A1,250
B1,000
C850
D680I do not understand this question. Can you please help me with the question Thankyou.
The opening WIP were 60% complete and would therefore already have had all the materials (because they are more than 50% complete) and so no further materials are needed in this period.
The 400 units that were completed from start to finish this period will have had 100% of the materials, because they were full finished.
The 600 units of closing WIP are only 20% complete and will therefore only have had 75% of the materials (they are less than 50% complete). Therefore the effective units for these is 75% x 600 = 450.
So the total effective units for materials is 400 + 450 = 850.
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