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There were 2000 units of WIP at the start of teh month. During the month 12000 units were started. At the end of the month 3000 units were in Closing WIP. Degree of completion of opening WIP was 70% and closing WIP was 20%. How many EU of production were achieved during a mont if FIFO were used ?
To find EU
Opening WIP = 2000*70%
Closing WIP = 3000*20%Is that right ? How much is the finished goods ?
No – that is only half right.
The equivalent units for the opening WIP are 30% x 2,000 = 600 (70% of the work had already been done).
The equivalent units for the closing WIP are 20% x 3,000 = 600The number of finished units is 12,000 + 2,000 – 3,000 = 11,000.
However for equivalent units you need to know how many units were both started and finished this month. That is 12,000 – 3,000 = 9,000. (or as a check, 11,000 – 2,000 = 9,000)
So the total number of equivalent units this month = 600 + 600 + 9,000 = 10,200.
Have you watched the free lectures on process costing? If not then I suggest that you do.
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