On January 1, 2016, Lester Company purchased 70% of Stork Corporation's $5 par common stock for $600,000. The book value of Stor
1 answer:
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Answer:
(E) 225,000; 195,000
Explanation:
Provided information,
Method used = FIFO
Provided units in opening as well as closing are 100% complete with respect to materials.
Opening = 50,000 units for $70,500 which were 100% complete with respect to material
During the month = 225,000 units for $342,000
Since both are 100 % complete for materials
Equivalent units for materials for the month = 225,000 = 225,000 units
Provided for conversion cost
Opening = 50,000 which is 40% complete, that means 60% was not complete which is completed during the month
= 50,000 60 % = 30,000 units during the month
225,000 units newly added this month out of which 150,000 units are completed
Remaining 75,000 units are 20% complete for conversion cost = 75,000 20% = 15,000 units completed.
Equivalent units completed during the month = 30,000 from opening + 150,000 + 15,000 = 195,000 units
Therefore correct option is
(E) 225,000; 195,000