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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