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The following data relate to a process for last month:
Opening inventory
200 units (70% complete)
Completed output
2,450 units
Closing inventory
300 units (40% complete)
Using the FIFO method, what were the equivalent units of production last month?sir why are we taking 70%? why not taking 30% as its fifo. and why subtracting 2450?
Answer=Opening inventory (equiv units) = 140 (200 x 70%)
Closing inventory (equiv units) = 120 (300 x 40%)
Total equivalent units produced = 2,450 – 140 + 120 = 2,430
If you did it the way I explain in my lectures you would have got exactly the same answer.
The number of units that were started and finished this period is 2,450 – 200 = 2,250.
Therefore the equivalent units this period are: (30% x 200) + 2,250 + (40% x 300) = 2,430 🙂
sir sorry i was confused , went through the lectures notes i wrote from your lecture. got it now thanks sir
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