Question

Inventory at the beginning of October in the last processing department of a company contained 50,000 units of goods that were partially complete. 70,000 units were completed and transferred out of the department during October. There was no ending inventory. Assume there was no spoilage. Which of the following statements is TRUE?

1. The equivalent units for transferred-in costs under FIFO for this department is 50,000

2. The equivalent units for transferred-in costs under FIFO for this department is 30,000

3. The equivalent units for transferred-in costs under FIFO for this department is 20,000

4. The equivalent units for transferred-in costs under FIFO for this department cannot be determined with the given data.

4. Inventory at the beginning of October in the last processing department of a company contained 20,000 units of goods that were partially complete. 50,000 units were completed and transferred out of the department during October. There was no ending inventory. Assume there was no spoilage. Which of the following statements is TRUE?

1. The equivalent units for transferred-in costs under weighted average method is 50,000

2. The equivalent units for transferred-in costs under weighted average method is 30,000

3. The equivalent units for transferred-in costs under weighted average method is 20,000

4. The equivalent units for transferred-in costs under weighted average method cannot be determined with the given data.

Answer 1

Question 4

Option A is the Correct Answer.

The equivalent units for transferred-in costs under Weighted Average Method.

The reason behind the answer is the concept that the weighted average method use. According to the weighted average the units which are transferred out during the current period of production are 100% Completed in this period so the total units transferred during the current period are from current Production.

In the question there was a opening stock of 20,000 which has not much relevance in weighted average method as it takes all the transferred units as current year Production.

The following table will help in understanding

Particulars	Units	% Completion	Equivalent Annual Units
Units Transferred Out	50,000	100%	50,000
Ending Inventory	0	0	0
Total			50,000

The answer is 50,000 Units

Question 3

Option D is the Correct Answer.

The equivalent units for transferred-in costs for this department under FIFO cannot be determined with the given data.

The rationale behind the answer is the concept of FIFO Method. According to FIFO Method the percentage of completion is required for Opening Inventory as well becuase FIFO Method considers only that portion of units of opening Inventory which is completed during the current year so the percentage of completion is an essential requirement for Calculation of units transferred out as per FIFO Method.

In this question there is no information about the completion percentage of 50,000 Units which were partially completed on the beginning of the year so it is not viable to calculate the equivalent units for transferred-in costs as per FIFO.

This is the reason that there is insufficient information being provided to solve the requirement for question so it is the correct answer.