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Holly Company has the following information for December 1 to December 31. All direct materials are 100% complete.Work-in-Process Beginning balance December 345 units, 20% complete for conversion $25,185Completed 900 units and transferred to finished goods inventory $245,700Direct materials 135,000Direct labor 49,500Factory overhead:Property taxes 6,750Depreciation 39,000Utilities 23,800Indirect labor 6,000Ending balance December 31, 445 units, 40% completeRequired: Calculate equivalent units using the weighted-average and FIFO methods.

Sagot :

Zviko

Answer:

Equivalent units using the weighted-average : Materials = 1,345 units, Conversion Costs = 1,078 units and FIFO methods : Materials = 1,000 units, Conversion Costs = 1,009 units.

Explanation:

Weighted-average method

This method focuses on completed units and units in ending work in process

Materials = 900 x 100 % +  445 x 100 % = 1,345 units

Conversion Costs = 900 x 100 % +  445 x 40 % = 1,078 units

FIFO method

This method focuses on work done during the production period only

Materials = 345 x 0 % +  555 x 100% + 445 x 100 % = 1,000 units

Conversion Costs = 345 x 80 % + 555 x 100% + 445 x 40% = 1,009 units

Conclusion

Equivalent units using the weighted-average : Materials = 1,345 units, Conversion Costs = 1,078 units and FIFO methods : Materials = 1,000 units, Conversion Costs = 1,009 units.

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