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Question is below: Guyz please help me with this question

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Question is below: Guyz please help me with this question

Vare produces various inks at its Normanton factory. Production details for Process 1 are as
follows:
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?
A 1,250
B 1,000
C 850
D 680

Please solve above question and give some trick if possible

December 1st 2018 AN ACCA USER 200 Points

1 Reply

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You have to read the question carefully: What are the equivalent units of production for MATERIALS in the period?
Production in the period is:
Completion of opening WIP + Started AND finished units + Closing WIP (i.e. started but not finished)
Using the information provided, the respective numbers are:
400 + 400* + 600
* is derived (of the 800 unit finished, 400 were in opWIP, or, alternatively of 1,000 started, 600 were unfinished)
The % completions for op/cl WIP relate to labour and overheads - not material. 3/4 (75%) of materials goes in at the start of the process - and the remaining 25% when the process (as shown by labour and o/head %s) is 50%.
So, for materials, equivalent units are:
0 + 400 + 600 x 75% = 850
In other words - opWIP was already complete with respect to materials, because 60% > 50% - so EU for materials in the current period is 0. And cl WIP has 75% of materials, because 20% < 50%.

January 11th 2019 AN ACCA USER 2,100 Points
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