Vare produces various inks at its Normanton factory. Production details for Process 1 are as
Opening work-in-progress, 1 April 400 units 60% complete
Closing work-in-progress, 30 April 600 units 20% complete
Units started 1,000
Units finished 800
The degree of completion quoted relates to labour and overhead costs. Three-quarters of
the materials are added at the start of the process and the remaining quarter added when
the process is 50% complete. The company uses the FIFO method of cost allocation.
What are the equivalent units of production for materials in the period?
Someone please tell me how to solve this problem, a trick will also be helpful..
the opening WIP is already 60% complete and so they already have all of the materials (they are more than 50% complete) and so no extra materials are needed for them.
The new units started (and finished) are 1,000 – 600 = 400, and they will have all (100%) of the materials.
The closing WIP is 20% finished and so will only have 3/4 of the materials, so the effective units are 3/4 x 600 = 450
So the total effective units are 400 + 450 = 850.