Chapter 20, Problem 10E

To determine

Equivalent Units of Production:

Equivalent units of production under FIFO is computed by adding the equivalent units of finished goods and equivalent unit of work in process.

But under FIFO, the units completed and transferred out is divided in to two parts i.e. units completed from beginning in process inventory and units completed from current input.

Equivalent units of finished goods shall be 100% complete as regards to material and conversion cost in case of units completed from current input.

And the units completed from beginning in process inventory has been remaining work pending on it as regards to each element of cost. Hence, the degree of completion of for each element of cost shall be taken as 100% - degree of completion already completed in last period.

However, the equivalent units of in process inventory shall be computed on the basis of degree of completion in respect of each particular cost. And after equivalent units of finished goods and in process for both the cost, the equivalent units of both in respect to particular cost shall be added to arrive the number of equivalent units of production in respect to each particular cost.

TheEquivalent units of production under FIFO method shall be computed.