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Dear John,
please help with an answer for the following question.
Opening WIP – 400 units (60% complete)
Closing WIP – 600 units (20% complete)
Units started – 1000
Units finished – 800Degree of completion refers to labour and overgeads. Three quarters of the materials are added at start of the process and the remaining quarter is added when the process is 50% complete. The company uses FIFO.
What are the units of production for materials in the period?
Thank you
Why do you not have an answer in the same book in which you found the question?
(If you don’t then you should be using a different book; if you do then you should ask about whichever bit of the answer you do not understand)The opening WIP of 400 units do not have any more material (because they are already more than 50% complete).
Of the 1,000 new units started, 400 are completely finished and the other 600 are still in WIP.
The 400 finished will have had full materials. The other 600 will have had 75% materials (because they are less than 50% complete).
So the total effective units = 400 + (75% x 600) = 850
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