More inconsistency?

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  • #183872
    Anonymous
    Inactive

    CPAexcel said that for weighted average equivalent units (unlike FIFO), you do NOT include beginning work in process, but then in the answer it adds beginning work in process, or am I reading this wrong?


    The following information pertains to Lap Co.’s Palo Division for the month of April:

    Number of units Cost of materials

    Beginning work in process 15,000 $5,500

    Started in April 40,000 18,000

    Units completed 42,500

    Ending work in process 12,500

    All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent unit for materials is

    A. $0.59.

    B. $0.55.

    C. $0.45.

    D. $0.43.

    Answer D. Under the weighted average method, the cost per equivalent unit includes all the work done through the end of the current period, including the work performed on beginning inventory during the previous period. This is why the method is called the weighted average method. In this situation, material is added at the beginning of the process. Therefore, all units are considered complete with respect to materials. The costs associated with this effort form the numerator of the calculation.

    The sum of units completed plus units in ending inventory equals 55,000 (42,500 + 12,500). The total cost incurred on material equals $23,500 ($5,500 + $18,000). Thus, the cost per equivalent unit for materials is $.43 ($23,500/55,000).

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  • #517735
    impska
    Member

    I don't have CPAexcel, but equivalent units are as follows:

    Weighted Average:

    Units completed + (End WIP x % Complete) = Equivalent Units

    FIFO:

    (Beginning WIP x % complete) + (Completed units – Beg WIP) + (End WIP x % Complete)

    You answer does not add the beginning units. It adds completed (42500) plus End WIP (12500) to get 55000.

    REG - 94
    BEC - 92
    FAR - 92
    AUD - 99

    #517764
    impska
    Member

    I don't have CPAexcel, but equivalent units are as follows:

    Weighted Average:

    Units completed + (End WIP x % Complete) = Equivalent Units

    FIFO:

    (Beginning WIP x % complete) + (Completed units – Beg WIP) + (End WIP x % Complete)

    You answer does not add the beginning units. It adds completed (42500) plus End WIP (12500) to get 55000.

    REG - 94
    BEC - 92
    FAR - 92
    AUD - 99

    #517737
    Anonymous
    Inactive

    Oh wow I totally misread the answer lol. Thanks for the clarification. No wonder I was confused.

    #517766
    Anonymous
    Inactive

    Oh wow I totally misread the answer lol. Thanks for the clarification. No wonder I was confused.

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