Conlon Chemicals manufactures paint thinner. Information on the work in process follows: • Beginning inventory, 41,000 partially complete gallons. • Transferred out, 207,000 gallons. • Ending inventory (materials are 21 percent complete; conversion costs are 9 percent complete). • Started this month, 243,000 gallons. Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs Required: a. Compute the equivalent units for materials using FIFO.

Total equivalent unit of materials 202,670  units

Explanation:

Under the first-in -first out system, to account for the units completed in a period, it is assumed that the opening inventory units are first completed and the balance represents the newly introduced.

Fully worked represents unit of inventory started this this period and completed this period

Fully worked = completed units - opening inventory

Fully worked = 207000 -41,000 = 166,000 units

Closing inventory = 41,000 + 243,000 - 207,000= 77,000

Item                                               Units                     Equivalent Units

Opening WIP                             41,000 ×    50%    =     20,500

Fully worked                             166,000 ×  100%  =     166,000

Closing WIP                               77,000×   21%     =      16,170

Total equivalent unit                                                      202,670

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