Question

In: Accounting

Department M had 2,700 units 55% completed in process at the beginning of June, 11,600 units...

Department M had 2,700 units 55% completed in process at the beginning of June, 11,600 units completed during June, and 1,300 units 25% completed at the end of June. The number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories is a.13,225 units b.11,925 units c.8,900 units d.10,440 units

Solutions

Expert Solution

Option(D) 10,440 units is correct.

FIFO
Unit Reconcilation
Beginning WIP 2700
Started 10200
Total units accounted for: 12900 units
Beginning WIP 2700
Completed (11,600-2,700) 8900
Ending WIP 1300
Total units accounted for: 12900 units
First, The units transferred out is divided into two. One part is begnning WIP and another is started and completed during the current year.
Equivalent units of production
Particulars Units % of Material EUP-Material %Conversion EUP -Conversion cost
Beginning WIP 2700 45% 1215 45% 1215
Completed (8700-1300) 8900 100% 8900 100% 8900
Ending WIP 1300 25% 325 25% 325
Total UNITS 12900 10440 10440

In Equivalent units-% completion with beginning WIP is (100-completion %) = 100% - 55% = 45%

In Equivalent units-% completion with ending WIP - Take as it is. (25%)
In Equivalent units-% completed Units [11,600-2,700]=8,900 = 100%

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