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Topic: FIFO - EU - units started (

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700321
Major Contributor

Joined: 26 Aug 2009
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Posts: 308

Posted: 18 Nov 2009 at 13:20 \| IP Logged

ok can someone help with this type of FIFO EU problem?

A co uses FIFO method in process costing. The company reported 25,000 EU for materials last month. The companys B/I consisted on 6,000 units, 40% complete with respect to materials. The E/I consisted of 4,000 units, 70% complete with respect to materials. The number of units STARTED during the month was?

The correct answer is $22,600

This problem you have to work backwards b/c they give you EU, anybody have a EASY way to figure this out?

thanks

bryris
Major Contributor

Joined: 07 Dec 2008
Location: United States
Online Status: Offline
Posts: 624

Posted: 18 Nov 2009 at 13:45 \| IP Logged

Here is the formula you are familiar with:

BWIP (the % completed in current period) + units started AND completed + EWIP = 25,000

BWIP = 6,000 * .6 = 3,600
EWIP = 4000 * .4 = 2,800

So:

3,600 + X + 2,800 = 25,000
X = units started and completed.

Solve for X = 18,600 <---- units started and completed.

Then add EWIP - BUT DO NOT USE EU HERE. IT ASKS FOR UNITS STARTED, NOT EU - of 4,000 to it.

22,600 units started.

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700321
Major Contributor

Joined: 26 Aug 2009
Online Status: Offline
Posts: 308

Posted: 18 Nov 2009 at 14:06 \| IP Logged

ok thanks

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