Week 11 - Equivalent Unit

Catty Company uses a process-cost accounting system. The company adds all direct materials at the start of its production process; conversion cost, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete in the production process. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

• A. Materials, 40%; conversion cost, 40%.

• B. Materials, 40%; conversion cost, 100%.

• C. Materials, 100%; conversion cost, 40%.

• D. Materials, 100%; conversion cost, 100%.

Aura Company uses a process-cost system for its single product. Material A is totally added at the end of the process while material B is totally added when the units are 75% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 80% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

• A. A, 4,800; B, 0.

• B. A, 4,800; B, 4,800.

• C. A, 6,000; B, 4,800.

• D. A, 0; B, 6,000.

XYZ Company has two production departments, X, Y and Z. On April 1, Department A has 4 WIP units, each 25% completed (costs = ฿48= 12 * 4 units). During April, production costs totaling ฿308 were added to production. 7 units were completed and on April 30, 2 units remained in production, 50% complete. EU represents the number of similar complete units which could have been produced given the amount of works actually performed during the period. Using FIFO Method, what is the equivalent units?

• A. 8

• B. 7

• C. 6

• D. 5

AA Textile Co., manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs. The equivalent units of direct materials for April total:

• A. 9,000.

• B. 13,000.

• C. 13,600.

• D. 14,400.

AA Textile Co., manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs. The equivalent units of conversion for April total:

• A. 9,000.

• B. 10,600.

• C. 11,200.

• D. 12,000.

An assumption of the FIFO process-costing method is that:

• A. the units in beginning inventory are not necessarily assumed to be completed by the end of the period.

• B. the units in beginning inventory are assumed to be completed first.

• C. ending inventory will always be completed in the next accounting period

• D. no calculation of conversion costs is possible

A distinct feature of the FIFO process-costing method is that the:

• A.  work done on beginning inventory before the current period is blended with the work done during the current period in the calculation of equivalent units. Work done in previous period is blended with work done this period

• B.   work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units. Work done in previous period is kept separated from work done this period

• C.  work done on ending inventory is kept separate from the work done during the current period in the calculation of equivalent units and is usually not included in the calculation. Ending WIP units are not included.

• D.  FIFO process-costing method is only minimally different from the weighted-average process-costing method. Beginning WIP units are not included

AA Textile Co., manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs. Using FIFO Method, the equivalent units of direct materials for April total:

• A. 8,000.

• B. 13,600

• C. 11,000.

• D. 15,000.

AA Textile Co., manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs. Using FIFO Method, the equivalent units of conversion for April total:

• A. 8,000.

• B. 11,200

• C. 12,000

• D. 10,000.

A major advantage of using the FIFO process-costing method is that:

• A. FIFO makes the unit cost calculations simpler

• B. in contrast with the weighted-average method, FIFO is considered GAAP

• C. FIFO provides managers with information about changes in the costs per unit from one period to the next

• D. All of these answers are correct.