Question

Calegari Corporation makes cleaning products in two sequential departments, Mixing and Packaging. Materials are added at the beginning of the process in the Mixing Department. Conversion costs are added evenly throughout each process. Calegari uses the FIFO method of process costing. In the Mixing Department for the month of March, beginning work in process was 3,000 pounds (70% processed), 37,000 pounds were started in process, 35,000 pounds transferred out, and ending work in process was 60% processed. Calculate equivalent units of materials during March for the Mixing Department. A. 35,000 B. 35,900 C. 37,000 D. 37,900 E. 40,000

Answer 1

Answer:

The correct anwer is B.

Explanation:

Giving the following information:

Calegari uses the FIFO method of process costing. In the Mixing Department for March, beginning work in process was 3,000 pounds (70% processed), 37,000 pounds were started in the process, 35,000 pounds transferred out, and ending work in process was 60% processed.

To calculate the number of equivalent units, we need to use the following structure:

Beginning work in process = beginning inventory* %incompleted

Units started and completed = units completed - beginning WIP

Ending work in process completed= Ending WIP* %completed

=Number of equivalent units

Number of equivalent units:

Beginning work in process = 3,000*0.3= 900

Units started and completed = 35,000 - 3,000= 32,000

Ending work in process completed= 5,000*0.6= 3,000

=35,900

Answer 2

The equivalent units of materials during March for the Mixing Department is option E. 40,000.

Calculation of the equivalent units of materials:

Equivalent units of materials = Units completed and transferred out + Ending work in process

= 35000*100% + (3000+37000-35000)*100%

= 40000 units

Hence, we can conclude that the option E is correct.

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