Budgeted sales next year are 5,00,000 units. Desired closing finished goods are 1,50,000 units, and closing work in progress is 60,000 equivalent units. Opening finished goods are 80,000 units and opening work in progress is 50,000 equivalent units. How many equivalent units must be produced?
Correct answer C. 5,80,000
Explanation
Required production is sales plus closing finished goods minus opening finished goods, plus closing WIP minus opening WIP: 5,00,000 + 1,50,000 - 80,000 + 60,000 - 50,000 = 5,80,000.
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