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Process account information:
Opening WIP 250units $3000
Added material 4500units $22500
Labour $37500
Normal Loss 225units $450
Output 4100units
Abnormal loss 275 units
Closing WIP 150 unitsOpening WIP
Material 100% Labour 40%
Closing WIP
Material 100% Labour 30%The company uses the FIFO method for valuing the output from the process and all losses occurred at the end of the process.
What were the equivalent units for labour?
Answer: 4320 units
The opening WIP needs 60% work to finish, so the equivalent units are 60% x 250 = 150.
The output is 4,100 of which 250 were in WIP brought forward and so 4100 – 250 = 3850 were full completed this period. The abnormal loss (which is costed as though fully produced) is 275 units. So total of 3850 + 275 = 4125 units.
The closing WIP is 30% finished, so the equivalent units are 30% x 150 = 45.So the total equivalent units = 150 + 4,125 + 45 = 4,320
I suggest that you watch my free lectures on process costing.
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