[barelystayingsane]

Becker Question –

At the top of page B1-51 in the Quantities section under the Conversion columns, why are “Units in process, May 31” stated in equivalent units but “Units in process, May 1” are not?

For consistent treatment, wouldn’t it be either

Treating both as equivalent units:

Units in process, May 1 – 1,600 (4,000 x 40% complete)

Units transferred in – 14,000 (10,000 + 4,000 x 60% + 2,000 x 80%)

Units transferred out – 14,000

Units in process, May 31 – 1,600 (2,000 x 80% complete)

or

Treating neither as equivalent units:

Units in process, May 1 – 4,000

Units transferred in – 12,000

Units transferred out – 14,000

Units in process, May 31 – 2,000

Thanks!

[SeattleAccountant]

@Barely

Under FIFO method (3 steps) should be:

1. WIP beg x % to complete. BUT in our particular situation (given the facts on page B1-50) we have 100% DM, thus line for Materials (May 1st, beg) under FIFO is blank on page B1-51 – there is nothing to complete for direct materials that are in the beginning inventory, they are all done. Normally, here we would have a number if WIP beg was partially incomplete.

2. …

3. …

Becker Class of Jan - Aug 2013: FARB DONE!!!!
CPA license pending 🙂

[barelystayingsane]

Sorry, I just re-read my post and realized that I was really vague regarding what numbers I was talking about. My bad! I'm actually looking at the second and fourth columns of numbers, specifically the first six rows at the top of the page. I understand the computation of equivalent units halfway down the page, but I'm confused at the top of the page why Conversion Units in process, May 31 is computed as 2,000 x 80% complete, but Conversion Units in process, May 1 is 4,000 and not computed as 4,000 x 40% complete. If you were to move on to the next month, Conversion Units in process, June 1 would equal Conversion Units in process, May 31 (or 2,000 x 80%). In the same way, wouldn't Conversion Units in process, May 1 be equal to Conversion Units in process, April 30, at which point 4,000 units were 40% completed?

[barelystayingsane]

I just reread my second post, and I feel like I didn't word that one very well either. :-/

[SeattleAccountant]

Beg WIP gets different treatment than ending WIP.

FIFO (3 steps)

1. May 1 WIP Conversion Costs 4000 x 60% (NOT 40%, b/c we are calculating how many we need to complete, not how many were already completed, compare that to the ending WIP calculation)

2. ….

3. May 31 WIP Conversion Costs 2000 x 80% completed (in contrast to above)

Hope that makes sense, although I'm not sure if that answers the question 🙂

Becker Class of Jan - Aug 2013: FARB DONE!!!!
CPA license pending 🙂

[barelystayingsane]

That makes sense, but the number Becker has in the first row for conversion is 4,000, not 4,000 x 60%. I'm thinking it may be a typo on Becker's part!

[SeattleAccountant]

Maybe i'm looking at the wrong column?!

Where exactly on the page it is?

edited: found it under quantities beg and quantities end.

Looks like beginning gets booked in at 100% but ending is reflected only by completed percentage for some reason.

Becker Class of Jan - Aug 2013: FARB DONE!!!!
CPA license pending 🙂

[barelystayingsane]

It's under the “Quantities” section of “Compute a production report.” Specifically the numbers right underneath the Conversion columns (they're the same under FIFO and weighted-average, so that doesn't make a difference). Vertically, they go:

4,000

11,600

15,600

14,000

1,600

15,600

So they calculated Units in process, May 31 as 1,600 (which is 2,000 x 80% complete), but they calculate Units in process, May 1 as 4,000 even though the units were not 100% complete at the beginning of the month.

[SeattleAccountant]

Yeap, I see it now and edited post above.

Not sure what is happening, the treatment for quantities is puzzling and page B1-46 example does not indicate proper treatment for this issue since no numerical example is posted.

Stuff like that really bugs me given the fact that were are tested on minutia. It is a confidence killer although I should probably take it easy and work on volume than accuracy. I'm just gonna leave it alone and rework B3 which is much more pleasant than B2.

Becker Class of Jan - Aug 2013: FARB DONE!!!!
CPA license pending 🙂

[barelystayingsane]

Right?? So strange… It's got to be a typo. I don't know what other explanation there could be.

[barelystayingsane]

I sent an email to Becker a couple days ago and never got a reply. If I hear anything from them, I will post it on here for you! Thanks for your help!!!

[barelystayingsane]

So I got a reply from Becker. I don't think the person who replied understood my question. He also mentioned something along the lines of “the amount that you have for units transferred is 8,000, which is inaccurate.” I don't mention 8,000 anywhere in my question. Very confused…. Anyway, here's his answer. If anyone can decipher this, please let me know:

“The methodology used in the comprehensive example is the same as the pass key with the exception that the two attributives, material and conversion, are accounted for separately.

[He then basically pulled straight from the book how to calculate equivalent units under W/A and FIFO, which I already understood and which I will omit for the sake of space.]

The amount that you have for units transferred is 8,000. That is inaccurate. The numberfor units transferred should be 12,000 and can be verified by Fact Pattern information 2 & 3 on page 51

Units started and completed this period 10,000

Units in process May 31 2,000

The units in process (4,000) are not part of the units started this period.

The solution to this problem is correct. See below.

FIFO Percentage complete Current period E/U

Material Conversion Material Conversion

1. Units in Process May1 4000 100% 40% 0 2400

2. Units started & completed in May 10000 10000 10000

3. Units in Process May 31 2000 100% 80% 2000 1600

Total E/U 12000 14000

Add Beginning Inventory 4000 1600

Units charged to Department 16000 15600″

[Author]

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