Question

Department C is the first stage of Cohen Corporation's production cycle. The following equivalent unit information is available for conversion costs for the month of September:
Beginning work-in-process inventory (20% complete) 82,000
Started in September 1,410,000
Completed in September and transferred to Department D 1,220,000
Ending work-in-process inventory (70% complete) 272,000
Using the FIFO method, the equivalent units for the conversion cost calculation are:
a. 1,421,200
b. 1,220,000
c. 1,203,600
d. 1,355,600
e. None of the above

Answer 1

Answer:

e. None of the above

Explanation:

FIFO method focuses on the work to be done in the current period. This means we first finish off work in opening inventory, then complete work in units started, finally some units in ending inventory. In that order. Hence the name FIFO (First In First Out).

Equivalent units - Conversion Costs calculation

To Finish Work In Process Inventory (82,000 x 80%)        65,600

Started and Completed (1,220,000 - 82,000) x 100 %   1,138,000

Ending Work In Process (272,000 x 70%)                         190,400

Total Equivalent units                                                      1,394,000

Conclusion :

the equivalent units for the conversion cost calculation are 1,394,000 units.