In: Accounting
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
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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