Question

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 72,000 chairs. During the month, the firm completed 77,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 11,000 chairs in ending inventory. There were 16,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.

Beginning inventory:
Direct materials $24,000 Conversion costs $35,000

Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000

What were the equivalent units for conversion costs during February?

Answer 1

Equivalent units for conversion cost = 81000

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
			Conversion cost		Conversion cost
Beginning WIP	16,000		30%		70%
Units introduced	72,000
Total units to be accounted for	88,000
Completed and Transferred unit	77,000		0%		100%
Ending WIP	11,000		0%		80%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units			Conversion cost
Units Transferred:				% completed this period	Equivalent Units
From WIP	16,000			70%	11,200
From units started/Introduced	61,000			100%	61,000
Total	77,000				72,200
	Total Units			Conversion cost
Ending WIP				% completed this period	Equivalent Units
Total	11,000			80%	8,800
Total EUP	88,000				81,000