Question

_6. (CPA) The Wiring Department is the second stage of Flem Company's pro- duction cycle. On May 1 of the current fiscal year, the beginning work-in- process inventory consisted of 25,000 units that are 60% complete as to conversion costs. During May, 100,000 units are transferred in from the first stage of Flem's production cycle. On May 31, the ending work-in-process inventory consists of 20,000 units that are 80% complete as to conversion costs. Direct materials are added at the end of the process, and conversion costs are added evenly throughout the process. Using the weighted average method, the equivalent units are: Transferred-in Costs a. 100,000 125,000 (C. 125,000 d. 125,000 Direct Materials 125,000 105,000 105,000 125,000 Conversion Costs 100,000 106,000 121,000 121,000

need help with 7 but the information in question 6 is said to be meeded in order to solve

Answer 1

Correct option is "B"

Working:

Step 1 )Units completed and transferred out = Beginning WIP +transferred in -ending WIP

                     = 25000+ 100000-20000

                     = 105000

Under FIFO method units transferred in first are transferred out first .So out of units completed and transferred out ,25000 is from Beginning Work in process and remaining 105000-25000 = 80000 is from current period production.

Step 2)

	Transferred in	Material	conversion
Transferred out
Beginning work in process	0	25000*100%= 25000	25000*40%=10000
current period	80000*100%=80000	80000*100%= 80000	80000
Ending work in process	20000*100%=20000	20000*0%= 0	20000*80%= 16000
Equivalent unit of production	100000	105000	106000

**Since material are added at end of process ,so 100% of material is applied to beginning work in process (when transferred out) and in respect of ending work in process inventory ,material will be applied when they are 100% complete.

**For conversion cost :Beginning WIP is already 60% completed so 40% is completed in current period .