# CMA Study Group

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## Chapter 6 Gleim Outline

• #### 1.  Chapter 6 Gleim Outline

Posted 12 days ago
Hello,

For the following question the correct answer is 208,000 but its not clear in the explanation on why they use the numbers they do? Answer is calculated as follows: EUP=(48,000*90%) + 184,000 - (32,000 x 60%)

A company uses process costing to manufacture Product X and has the following physical unit flow information available for the month of January. Beginning work-in-process inventory, January 1 32,000 Started in production during January 200,000 Completed production during January 184,000 Ending work-in-process inventory, January 31 48,000
The beginning inventory was 60% complete for direct materials and 30% complete for conversion costs. The ending inventory was 90% complete for direct materials and 60% complete for conversion costs. Using the first-in, first-out method, the equivalent units of production for direct materials are

• #### 2.  RE: Chapter 6 Gleim Outline

Posted 11 days ago
Hi Derrick,

Under FIFO only materials used in the current period are considered in calculating EUP (this is different than weighted average method).

• The first step is to determine the 3 different included amounts for calculating EUP (Beg WIP, Units Started and Completed, End WIP)

Beginning WIP (given): 32,000

Units Started and completed = Units started (200,000) – End WIP (48,000) = 152,000

End WIP (given): 48,000

• Next determine the percentage complete for each of the three line items:

Beg WIP: 32,000 x 40% = 12,800

[since units in beg inventory were 60% complete for DM, only 40% remain to be completed – so the 40% is calculated by subtracting 100% - 60% = 40%]

Units Started and completed: 152,000 x 100% = 152,000 [in both the FIFO method and weighted avg. method - all units started and completed are included in EUP]

End WIP: 48,000 x 90% = 43,200 [we are using the 90% (given) DM amount as all of these materials were used in the current period]

BEG WIP – 12,800

Started/completed – 152,000

End WIP – 43,200

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Total EUP = 208,000

Hope this helps!

Best,

Kirk

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Kirk Nebel
Accountant
Santa Clarita CA
United States
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• #### 3.  RE: Chapter 6 Gleim Outline

Posted 8 days ago
Thanks this is very helpful indeed. One other followup point is that it doesnt explicitly state that materials are added at the beginning or throughout the process so what factors are you using to determine the approach?

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Derrick Durbin
Controller
Graham NC
United States
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• #### 4.  RE: Chapter 6 Gleim Outline

Posted 11 days ago
The EPU for material under the FIFO method is calculated as follow;

Beginning WIP (32000 * 40%) = 12800 (Here we will take only those units on which work done in the current period i.e 40%)
Units started & completed ( 184000-32000)*100% = 152000
Closing WIP (48000* 90%) = 43200

Adding all above units (12800+152000+43200) = 208000 Units

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Accountant
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• #### 5.  RE: Chapter 6 Gleim Outline

Posted 8 days ago
Yes this is also very helpful thank you so much!

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Derrick Durbin
Controller
Graham NC
United States
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