Neechi Company adds all materials at the beginning of its manufacturing process. Production information for the third quarter of the year follows:

Neechi Company adds all materials at the beginning of its manufacturing process. Production information for the third quarter of the year follows:

 

Requirement 1:

Calculate the number of units started during each month.

 

	Beginning							Ending
	Work in Process							Work in Process
						Units				Conversion
Month	Units	Number of Units Started				Transferred Out		Units		Complete (percent)
July	0					77,000		26,400		78
August						105,500		20,000		62
September						80,500		30,200		29

 

Requirement 2:

Calculate the number of equivalent units for both materials and conversion for each month.

 

	Equivalent Units
Month	Materials		Conversion
July
August
September

Explanation:

1:

Beginning Inventory + Started = Transferred Out + Ending Inventory

July:  0 + Started = 77,000 + 26,400

Started = 103,400

August:  26,400 + Started = 105,500 + 20,000

Started = 99,100

September:  20,000 + Started = 80,500 + 30,200

Started = 90,700

2:

July:

Materials = 77,000 + 26,400 = 103,400 Equivalent Units

Conversion = 77,000 + (26,400 × 78%) = 97,592 Equivalent Units

August:

Materials = 105,500 + 20,000 = 125,500 Equivalent Units

Conversion = 105,500 + (20,000 × 62%) = 117,900 Equivalent Units

September:

Materials = 80,500 + 30,200 = 110,700 Equivalent Units

Conversion = 80,500 + (30,200 × 29%) = 89,258 Equivalent Units