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Magic Company adds materials at the beginning of the process in Department A. The following information on physical units for Department A for the month of August is available. Work in process, August 1 (63% complete with respect to conversion) 16,600 Started in August 120,000 Completed 120,000 Work in process, August 31 (77% complete with respect to conversion) 16,600 Required: a. Compute the equivalent units for materials costs and for conversion costs using the weighted-average method. b. Compute the equivalent units for materials costs and for conversion costs using the FIFO method.

Respuesta :

anthougo

a. Equivalent units for materials and conversion costs are computed under the weighted-average method are as follows:

Equivalent units:

Materials  = 136,600  

Conversion = 132,782

b.  Equivalent units for materials and conversion costs are computed under the FIFO method are as follows:

Equivalent units:

Materials  = 120,000  

Conversion = 122,324

Data and Calculations:

Physical Flow of Units:

                                                 Units    % Completed    % to complete

Beginning Work in Process   16,600           63%             37% (100 - 63)

Units started in August       120,000

Total units in process         136,600

Units completed                 120,000           100%            0%

Ending Work in Process      16,600             77%            23% (100 - 77)

Units started and completed this period = 103,400 (120,000 - 16,600)

Equivalent units using the weighted-average method:

                                                             Materials              Conversion Costs

Units completed                 120,000     120,000 (100%)       120,000 (100%)

Ending Work in Process      16,600        16,600 (100%)          12,782  (77%)

Total equivalent units                         136,600                    132,782

Equivalent units using FIFO method:

                                                                  Materials          Conversion Costs

Beginning Work in Process      16,600              0                      6,142 (33%)

Units started and completed 103,400   103,400 (100%)      103,400 (100%)

Ending Work in Process          16,600      16,600 (100%)        12,782  (77%)

Total equivalent units                           120,000                 122,324

Thus, there is a difference between the computation of equivalent units using the weighted-average method and under the FIFO method because the FIFO method assumes that beginning work in process units are completed first before units started during the current period.

Learn more: https://brainly.com/question/17924678

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