RSTN Co. produces its product through two sequential processing departments. Direct materials and conversion are added to the product evenly throughout each process. During October, the first process finished and transferred 150,000 units of its product to the second process. Of these units, 30,000 were in process at the beginning of the month and 120,000 were started and completed during the month. The beginning work in process inventory was 30% complete. At the end of the month, the work in process inventory consisted of 20,000 units that were 80% complete. Compute the number of equivalent units of production for the first process October. Use the FIFO method.

Total equivalent  units  157,000

Explanation:

Item                            Units      Workings                EU              Notes

Opening inventory   30,000   70%×30,000       2,100               1

Fully worked 7        120,000  100%×120,000      120,000         2

Closing WIP             20,000.   80%×20, 000        16,000            3

Total equivalent units                                          157,000

Notes

1. The degree of completion for opening inventory is 70% i. e 100%-30%. Remember that 30% work has been done in the previous period, so the balance is to be done in this current period

2. Fully work represent the units of inventory introduced in the current period and completed in the same period. Meaning 100% work was achieved in the period.

3. Closing work is only 80% completed. This represent work started this period but not yet completed.

Equivalent units for the month of October is 157,000 units i.e (2,100+120,000+16,000)

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