[Anonymous]

I have been studying for my 2nd go around with BEC for about 2 months. I feel confident about almost all of the subjects covered on this portion of the exam with the exception of Equivalent Units of Production. For some reason I can’t get my pea-brain around this. I have found about 15 formulas to calculate FIFO equivalent units but I can’t seem to get any of them to work consistently. I’m not sure but the problem may be with how I am interpreting the standard EUP question. For example sometimes a question will say “Units Started = XX” and sometimes it will say “Units Started and Completed = XX” I’m pretty sure I am supposed to use different formulas depending on the wording but I never know which one to use.

Can anyone please explain EUP to me in a way that makes sense?

[littlenumberrobot]

@CPAVol – What are you using to review? I was using Wiley Test Bank, but also had issues with this area. I borrowed the Wiley Book from a friend and those examples really helped me understand it. I'd have to get back into the subject again to help you, but wanted to share how I mastered it back in December.

CA CPA - All because of the journey listed below
-----------------------------------------------------------------------
FAR - 53('10), 8/25/12 79 PASSED!
REG - 66('11), 69('12), 12/06/12 77 PASSED!!
BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

(Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

Ethics 90%

[Anonymous]

Very simple my friends. Just remember the only difference between the two methods (FIFO vs. WA) is how they handle beginning inventory. Your first step (if not already provided) is to calculate the total units to account for:

Beg Inventory

+ Transferred in/ started

Or

Ending Inventory

+ Completed and transferred out

Once you have that your ready to determine your equivalent units. For FIFO you have to complete the work on the Beginning inventory so your math looks like this:

Beginning inventory units x % work to be completed this period

Plus:

Units Completed and Transferred out – Beginning Inventory (don't want to account for them twice)

Plus:

Ending Inventory x % work completed this period

For Weighted Average its much simpler.

Units Completed and transferred out

Plus:

Ending Inventory x % work completed this period

Voila. Now remember when they ask you for costs for FIFO your ONLY concerned about cost incurred this period. Weighted average is the total cost of beginning inventory + cost incurred this period.

Hope that alleviates some of the confusion.

[Anonymous]

@CPAvol, Peter Olinto is good at explaining this concept. Just look around on Youtube for Becker clips, there might something to help you along. I had same problem on Audit with sampling and management assertions.

@bcjasper09 do you have something similar for audit? You can put it in the audit thread.

Thanks,

Eli

[Anonymous]

@littlenumberrobot – I'm using Wiley test bank and Ninja notes.

@bcjasper09 – Thanks for the explanation! That's helpful.

@Eliabraham – Thanks for the suggestion… I'll look for it on Youtube.

[Anonymous]

If your trying to find Variance Analysis stuff on Youtube let me know if you find something worth watching. I watched some lady try to explain some overhead variances but it didn't help much at all. She also had a major lisp (possibly due to poor recording) so I couldn't understand what she was saying?

[Anonymous]

Hey guys, if you are taking the exam in the couple of days. Please let us know how it went. I am starting to freak out with a week to go. Freaking out for me is not good, because I don't focus on my study plan.

Any advise on how to best focus my attention will be appreciated. With AICPA & another71 rules in mind keep your feedback general i.e. know all your formula or practice going through AL. You know what I mean.

Eli

[Anonymous]

I've found that most people have issues with what percentages to use (the % or 1-%). The way I try to explain it is to look at what work the method cares about….

FIFO: we only care about the work this period. How much work did we have to do on the beginning inventory + started and completed this period + how much work did we already do on the ending inventory.

WA: we only care about what we finished this period. How many did we transfer out + how much work did we already do on the ending inventory.

[Anonymous]

My problem is when I run into questions like the one below from the Wiley test bank:

In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers

A. Current costs less cost of beginning work in process inventory

B. Current costs plus cost of beginning work in process inventory

C. Current costs only

D. Current costs plus cost of ending work in process inventory

Understanding as @Dale said above that when calculating WA EUP we only care about what we finished this period I would choose Current costs only…. and I would be wrong. According to Wiley the answer is B. Current costs plus cost of beginning work in process inventory. Their explanation says:

“When computing equivalent units of production under the weighted-average method, the work done last period on beginning work in process (BWIP) is considered. Therefore, when computing cost per equivalent unit, the cost associated with BWIP must be added to the current costs.”

I feel a migraine coming on.

[Anonymous]

Right. Just remember that FIFO only deals with current costs. WA deals with cost of Beginning Inventory and Current costs. The ending inventory answers are distractors, because they would also be part of current costs. I'm not sure how else to explain it you just have to memorize the concept that FIFO wants to know how much work we did this period and only the costs incurred to do that work and Weighted Average wants to know what we did last period plus this period and averaged out.

Sorry I couldn't be anymore help!

[Author]

Replies