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The HOW and WHY of Physical Flow Analysis and Equivalent Units: FIFO Method CORNERSTONE Information: The production of Bienestar's antihistamine product begins in the Blending
The HOW and WHY of Physical Flow Analysis and Equivalent Units: FIFO Method CORNERSTONE Information: The production of Bienestar's antihistamine product begins in the Blending Depart- ment. All materials are added at the beginning of the blending process. Output is measured in ounces. The production data for May are as follows: 6.7 Production: Units in process, May 1, 70% complete Units completed and transferred out Units in process, May 31, 40% complete 15,000 90.000 30,000 With ect to convenience Why: The physical flow schedule traces the units in process regardless of their stage of completion and provides the information needed for preparing the equivalent units schedule. FIFO uses only current output to calculate the current period unit cost. Thus, FIFO treats the work (equivalent output) in EWIP as belonging to the prior period and only counts the work (equivalent output for each input done this period as part of this period's output Required: 1. Prepare a physical flow schedule for May (Step 1). 2. Prepare an equivalent units schedule for May using the FIFO method (Step 2). 3. What if 80 percent of the materials were added at the beginning of the proces and 20 percent were added at the end of the process (assume the same type of materials)? How many equivalent units of materials would there be? (D) Think about the difference between the words may and shell". These words are used frequently throughout the ITA. Now review section 2 which of this words are used in that section and why
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