equivalent units of production

kellogg company (k) manufactures cold cereal products, such as frosted flakes. assume that the inventory in process on march 1 for the packing department included 1,200 pounds of cereal in the packing machine hopper (enough for 800 24-oz. boxes) and 800 empty 24-oz. boxes held in the package carousel of the packing machine.

during march, 65,400 boxes of 24-oz. cereal were packaged. conversion costs are incurred when a box is filled with cereal. on march 31, the packing machine hopper held 900 pounds of cereal, and the package carousel held 600 empty 24-oz. ($1\frac{1}{2}$-pound) boxes. assume that once a box is filled with cereal, it is immediately transferred to the finished goods warehouse.

determine the equivalent units of production for cereal, boxes, and conversion costs for march. an equivalent unit is defined as \pounds\ for cereal and \24-oz. boxes\ for boxes and conversion costs. if an amount is zero, enter in \0\.

kellogg company
equivalent units of production for cereal, boxes, and conversion cost
for march

line item description | cereal (in pounds) | boxes (in boxes) | conversion cost (in boxes)
inventory in process, march 1
started and completed in march
transferred to finished goods in march
inventory in process, march 31
total

Question

equivalent units of production

kellogg company (k) manufactures cold cereal products, such as frosted flakes. assume that the inventory in process on march 1 for the packing department included 1,200 pounds of cereal in the packing machine hopper (enough for 800 24-oz. boxes) and 800 empty 24-oz. boxes held in the package carousel of the packing machine.

during march, 65,400 boxes of 24-oz. cereal were packaged. conversion costs are incurred when a box is filled with cereal. on march 31, the packing machine hopper held 900 pounds of cereal, and the package carousel held 600 empty 24-oz. ($1\frac{1}{2}$-pound) boxes. assume that once a box is filled with cereal, it is immediately transferred to the finished goods warehouse.

determine the equivalent units of production for cereal, boxes, and conversion costs for march. an equivalent unit is defined as \pounds\ for cereal and \24-oz. boxes\ for boxes and conversion costs. if an amount is zero, enter in \0\.

kellogg company
equivalent units of production for cereal, boxes, and conversion cost
for march

line item description | cereal (in pounds) | boxes (in boxes) | conversion cost (in boxes)
inventory in process, march 1
started and completed in march
transferred to finished goods in march
inventory in process, march 31
total

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "explain_then_answer", "tutor" ], "needs_drawing": false, "concepts_used": [], "new_concepts": [ "Equivalent Units", "Process Costing", "FIFO Method" ], "current_concepts": [ "Equivalent Units", "Process Costing", "FIFO Method" ] } ## Analyze physical flows and units We need to determine the equivalent units of production for cereal (in pounds), boxes (in boxes), and conversion costs (in boxes) for March using the FIFO method. Let's first summarize the physical flow of units: - **Inventory in process, March 1:** - Cereal in hopper: $1,200\text{ pounds}$ (enough for $800$ 24-oz. boxes, since $1,200 \times 16\text{ oz/lb} = 19,200\text{ oz}$, and $19,200 / 24 = 800\text{ boxes}$). - Empty boxes in carousel: $800\text{ boxes}$. - Since conversion costs are incurred when a box is filled with cereal, these $800$ boxes in process on March 1 have not been filled yet (they are empty boxes and loose cereal in the hopper). Thus, work completed in prior periods for these units is $0\%$ for conversion. - **Units completed and transferred to finished goods in March:** - Total packaged and transferred: $65,400\text{ boxes}$. - Under FIFO, the first units completed are from the March 1 work-in-process inventory: $800\text{ boxes}$. - Therefore, units started and completed in March: $$ 65,400 - 800 = 64,600\text{ boxes} $$ - **Inventory in process, March 31:** - Cereal in hopper: $900\text{ pounds}$ (enough for $600$ 24-oz. boxes, since $900\text{ lbs} \times 1.5\text{ lbs/box} = 600\text{ boxes}$). - Empty boxes in carousel: $600\text{ boxes}$. - These are in-process and have not been filled yet, so conversion cost completion is $0\%$ for these ending units. ## Calculate equivalent units for Cereal (in pounds) Let's determine the equivalent units of production for **Cereal (in pounds)**: - **Inventory in process, March 1:** These $1,200\text{ pounds}$ of cereal were already in the hopper on March 1. Under FIFO, we only measure work done *during* March. Since the cereal was already there, $0\text{ pounds}$ of new cereal were added to complete these. - **Started and completed in March:** $64,600\text{ boxes}$ were started and completed. Each 24-oz. box requires $1.5\text{ pounds}$ of cereal ($24\text{ oz} / 16\text{ oz/lb} = 1.5\text{ lbs}$). $$ 64,600\text{ boxes} \times 1.5\text{ lbs/box} = 96,900\text{ pounds} $$ - **Inventory in process, March 31:** The ending inventory contains $900\text{ pounds}$ of cereal in the hopper. This cereal was added during March. $$ 900\text{ pounds} $$ - **Total equivalent units for Cereal:** $$ 0 + 96,900 + 900 = 97,800\text{ pounds} $$ - **Transferred to finished goods in March:** The total physical pounds transferred is: $$ 65,400\text{ boxes} \times 1.5\text{ lbs/box} = 98,100\text{ pounds} $$ ## Calculate equivalent units for Boxes (in boxes) Let's determine the equivalent units of production for **Boxes (in boxes)**: - **Inventory in process, March 1:** The $800$ empty boxes were already in the carousel on March 1. Under FIFO, $0\text{ boxes}$ were added in March to start these. - **Started and completed in March:** $64,600\text{ boxes}$ were started and completed. $$ 64,600\text{ boxes} $$ - **Inventory in process, March 31:** There are $600$ empty boxes in the carousel on March 31. These were added during March. $$ 600\text{ boxes} $$ - **Total equivalent units for Boxes:** $$ 0 + 64,600 + 600 = 65,200\text{ boxes} $$ - **Transferred to finished goods in March:** The total physical boxes transferred is: $$ 65,400\text{ boxes} $$ ## Calculate equivalent units for Conversion Cost (in boxes) Let's determine the equivalent units of production for **Conversion Cost (in boxes)**: - **Inventory in process, March 1:** On March 1, the packing machine hopper held cereal and the carousel held empty boxes. Since conversion costs are incurred when a box is filled, these $800$ boxes were $0\%$ completed with respect to conversion on March 1. To complete them in March, they had to be filled, requiring $100\%$ of the conversion work: $$ 800\text{ boxes} \times 100\% = 800\text{ boxes} $$ - **Started and completed in March:** $64,600\text{ boxes}$ were started and completed, requiring $100\%$ conversion work: $$ 64,600\text{ boxes} $$ - **Inventory in process, March 31:** On March 31, the hopper held cereal and the carousel held empty boxes. Since they have not been filled yet, they are $0\%$ complete with respect to conversion: $$ 600\text{ boxes} \times 0\% = 0\text{ boxes} $$ - **Total equivalent units for Conversion Cost:** $$ 800 + 64,600 + 0 = 65,400\text{ boxes} $$ - **Transferred to finished goods in March:** The total physical boxes transferred is: $$ 65,400\text{ boxes} $$ | Line Item Description | Cereal (in pounds) | Boxes (in boxes) | Conversion Cost (in boxes) | | :--- | :---: | :---: | :---: | | Inventory in process, March 1 | 0 | 0 | 800 | | Started and completed in March | 96,900 | 64,600 | 64,600 | | Transferred to finished goods in March | 98,100 | 65,400 | 65,400 | | Inventory in process, March 31 | 900 | 600 | 0 | | Total | 97,800 | 65,200 | 65,400 | { "subject": "Business", "question_type": "Fill-in-the-blank", "knowledge_point": [ "Business", "Accounting", "Equivalent Units of Production" ] }

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QUESTION IMAGE

Question

Explanation:

Analyze physical flows and units

Calculate equivalent units for Cereal (in pounds)

Calculate equivalent units for Boxes (in boxes)

Answer:

Line Item Description	Cereal (in pounds)	Boxes (in boxes)	Conversion Cost (in boxes)
Started and completed in March	96,900	64,600	64,600
Transferred to finished goods in March	98,100	65,400	65,400
Inventory in process, March 31	900	600	0
Total	97,800	65,200	65,400