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The Mexico Company manufactures a single product that goes through two departments. The
data relating to activity performed in first department during the month of June is given below:
Solution
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Exercise 1 (b):
The following data has been collected from three different situations. Units transferred out are
100% complete with respect to all cost elements. Stages of completion of beginning and ending
inventories are applicable to all cost elements.
Solution
The equivalent units in work in process ending inventory consist of the percentage of work done
in current period. The computations of equivalent units in work in process ending inventory for
all three situations are given below:
Situation 1:
= (1600 units × 1/2) + (2400 units × 1/4)
= 800 units + 600 units
= 1,400 units
Situation 2:
= (12,000 units × 1/2) + (8,000 units × 1/4)
= 6,000 units + 2,000 units
= 8,000 units
Situation 3:
= (6,000 units × 1/2) + (9000 units × 1/3)
= 3,000 units + 3,000 units
= 6,000 units
The equivalent units in work in process beginning inventory consist of the percentage of work
done in current period. The computations of equivalent units in work in process beginning
inventory for all three situations are given below:
Situation 1:
There is no beginning inventory in situation 1.
Situation 2:
= 25,000 units × 3/5
= 15,000 units
Situation 3:
= (18,000 units × 2/3) + (12,000 units × 1/2)
= 12,000 units + 6,000 units
= 18,000 units
Situation 1:
= (1600 units × 1/2) + (2400 units × 1/4)
= 800 units + 600 units
= 1,400 units
Situation 2:
= (12,000 units × 1/2) + (8,000 units × 1/4)
= 6,000 units + 2,000 units
= 8,000 units
Situation 3:
= (6,000 units × 1/2) + (9000 units × 1/3)
= 3,000 units + 3,000 units
= 6,000 units