kaplan question

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November 26, 2016 at 3:10 pm #351672
ryan32
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op. WIP 400 units 60% complete
cl. WIP 600 units 20% complete

units started 1000
units finished 800

The degree of completion quoted relates to labour and o/h cost. Three-quarters of the materials are added at the start of process and remaining quarter added when the process is 50% complete.Use FIFO method of cost allocation

What are the Equivalent Units of production for materials in the period?
a- 1250
b- 1000
c- 850
d- 680

Please tell how to solve it, sir.

Answer says option c- 850
November 26, 2016 at 3:21 pm #351680
John Moffat
Keymaster
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The opening WIP was already more than 50% complete and so already had all the materials.

During the period, the number of units both started and finished was 400, so they had full units of materials.

At the end of the period the 600 units WIP were less than 50% complete and therefore only had 75% of the materials. So the equivalent units = 75% x 600 = 450.

So the total equivalent units = 400 + 450 = 850.
November 26, 2016 at 6:14 pm #351710
ryan32
- Topics: 35
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how do we find out that 75% of 600 units in terms of material has been completed.
And when did the process ended for the period,is it assumed that at the point where the remaining quarter of materials put into process,at that point?if it is so then based on 3 quarters of material put into process i.e; 750 it completes 400 units and some percentage of 600 units.how can we say its 75%.
November 26, 2016 at 6:33 pm #351713
ryan32
- Topics: 35
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and also how can we say the op WIP was already more than 50% completed.Is it on the basis of 60% completion of labour and o/h.
November 27, 2016 at 2:23 am #351745
ryan32
- Topics: 35
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i think i got it sir
The closing WIP says 600 units which is 20% complete for labour and o/h

So only 3 quarters of material ie;450 units have been put into it.The remaining quarter of material ,150 doesn’t goes into it until the process is 50% complete.Since the cl. WIP is 20% complete process wise so material wise the cl. WIP will be 450/600 x 100= 75%.

Am i right sir?
November 27, 2016 at 6:06 am #351773
John Moffat
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Correct 🙂
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