Process costing - Equivalent units of production

Question 1

Define Equivalent units

Answer 1

the amount of whole units that could be gained from the amount of materials and effort contained in the partially completed units.

Question 2

what are the two methods for calculating equivalent units

Answer 2

FIFO, and Weighted average

Question 3

Walner co had 2,000 litres of apple juice on Jan 1. 80% of the ingredients had been added to the juice. What are the equivalent units?

Answer 3

1,600

2,000 x 80%

Question 4

Walner co had 2,000 litres of apple juice on Jan 1. 80% of the ingredients had been added to the juice.
The co records show that 40,000 litres were transferred to finished goods during the year. furthermore, 1,500 litres were on hand dec 31. This juice contained 60% of total ingredients.
How many units were started and completed for the year?

Answer 4

40,000 litres were transferred to finished goods during the period
2,000 of those litres were started in the previous period
therefore 38,000 litres were started and completed for this period

Question 5

Using the weighted average method calculate the units of production.
Beg WIP, 2,000 litres 80% complete,. 38,000 litres started and completed, End WIP 1,500 litres 60% complete

Answer 5

Units completed and transferred
to next dept 40,000
WIP- end (1,500 x 60%) 900
Equivalent units of production 40,900

Question 6

Using the FIFO method calculate the units of production.

Beg WIP, 2,000 litres 80% complete,. 38,000 litres started and completed, End WIP 1,500 litres 60% complete

Answer 6

WIP beg (2,000 x (100% - 80%) 400
Units started and completed 38,000
WIP end (1,500 x 60%) 900
Equivalent units of production 39,300