The following production data were taken from the records of the Finishing Department for June: Inventory in process, June 1 (30% completed) 4,000 units Completed units during June 65,000 units Ending inventory (60% complete) 7,000 units What is the number of material equivalent units of production in the June 30, Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories and materials were added at the beginning of the process? a. 7,000 units b. 76,000 units c. 68,000 units d. 72,000 units

Total equivalent unit        68,000  units

Explanation:

Item                                       equivalent unit

Opening inventory                70% ×  4000                 2,800

Fully worked units                  100% × 61,000              61,000    

Closing inventory                60%×  7000                       4200

Total equivalent unit                                                     68,000

Notes

1. DOC 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 60% completed. This represent work started this period but not yet completed.

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