[Anonymous]

Hi guys,

My book is contradicting itself on the formula for the EU:

I’ve been using this one I memorized:

Beg. WIP x % Completed

+Units Completed – Beg. WIP

+End. WIP x % Completed

=EU

but … when I got to this one problem it’s doing a different way… dunno if I’m just not thinking straight…

Completed Units

+EU in Ending Inv.

-EU in Beg. Inv

=EU

It doesn’t come up with the same answer and it’s getting too confusing. Can anyone please clarify?

Thanks!!

[Florida_Candidate]

The second formula you posted is correct. The reason is, the first formula you're adding in BEG WIP * % completed, and in reality, those percentage completed were completed BEFORE this period so you need to take those OUT not add them in (hence why the second formula takes them out). Equivalent units are those units that were worked on THIS period. I hope this makes sense 🙂

FAR-91 (7/29)
AUD-99 (8/23)
BEC-90 (10/1)
REG-99 (11/3)

[herbert7890]

I will just copy paste what I posted on the BEC thread:

@ apc-cpa There are two ways of calculating equivalents units: Weighted Average and FIFO

I will make up an example fact pattern: Beginning Inventory is 100 units (70% completed), units completed during the period are 500 and ending work in process in units is 200 (40% completed)

Weighted Average Equivalent Units Calculation:

Units Completed During the Period

+ Units in Ending Inventory (multiplied by percent of completion)

= Equivalent Units

500 units (units completed during the period)

+ 80 (200 units x .40)

= 580 Equivalent Units Weighted Average

FIFO method Equivalent Units Calculation:

Beginning Work in Process to be Completed

+ Units Completed during the Period

– Beginning Work in Process (100% of Beg WIP)

+Units in Ending Inventory (multiplied by percent of completion)

=Equivalent Units

30 Units (100 units x 1 – .70)

+500

-100 (all of the Beg WIP)

+80

= 510 Equivalent Units under FIFO

I hope this example will help you with this topic

FAR 88 - BEC 86 - AUD 90 - REG 85

[Florida_Candidate]

way to show me up Herbert 😉

FAR-91 (7/29)
AUD-99 (8/23)
BEC-90 (10/1)
REG-99 (11/3)

[herbert7890]

You know way more than me Florida Candidate!

FAR 88 - BEC 86 - AUD 90 - REG 85

[Author]

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