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Topic: FIFO EUP - Yaegar (

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700321
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Posted: 18 Nov 2009 at 10:52 \| IP Logged

ok,

I am still kinda lost on this one using the formulas Yaegar provided, they say

first you calculate units shipped

B/I + started - E/I = units shipped

second

Units shipped + E/I complete - B/I complete = EFU

I guess I am getting lost on what is DM complete at B/I and what is DM complete at E/I?

any suggestions?

thanks again

bryris
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Posted: 18 Nov 2009 at 11:08 \| IP Logged

DM can be added to the process at any point along the path. When you are determining EU for materials, you have to consider 1. how far along the units are in terms of % completion and 2. At what point DM are added.

If DM are added at the beginning of the process, then anything in BWIP is ignored for FIFO purposes. However, everything in EWIP is counted.

If DM are added evenly throughout the process (hypothetically), then the BWIP would be the percentage complete as would EWIP. Many times the problem will give you a percentage of DM completion. As such, you'd just calculate the BWIP and EWIP according to the percentage. Remember though that BWIP isn't included in FIFO. However, it is more complicated than it appears. For example, if BWIP is 60% complete with regard to DM, you will actually have to include the "uncompleted" part of BWIP in the FIFO calculation (i.e. the 40% of materials left to add).

So, more exactly, when using FIFO, you need to not consider that portion of BWIP which has already occurred in determining FIFO EU.

Weighted average is a bit easier.

Does that address your question?

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Posted: 18 Nov 2009 at 11:17 \| IP Logged

yeah - Im still confused.. Im going off Yaeger Cram package which says..

Units completed and transferred + ending WIP - Beg WIP = EU

I would of thought 170,000 + 20000 (25,000 x.8) - 12000(20,000 X .6).

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700321
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Posted: 18 Nov 2009 at 11:17 \| IP Logged

yeah it does,

I guess what Yaegar is saying which is what you are saying,

If DM is 60% complete B/I

and 40% complete E/I

you would take units shipped + 40% of E/I complete - 60% of B/I complete

thanks

kj_nyc
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Posted: 18 Nov 2009 at 11:23 \| IP Logged

The reason you don't multiply EI by 80% or BI by 60% in this problem is because the problem says direct materials are added when the process is 70% complete. So if process is less than 70% complete, there is 0% DM, and if the process is more than 70% complete, it's 100% DM.

So instead of
170,000 + 20000 (25,000 x.8) - 12000(20,000 X .6)
you do
170,000 + 25000 (25,000 x1) - 0 (20,000 X 0)

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