Question

Department S had 500 units 68% completed in process at the beginning of the period, 8,000 units completed during the period, and 900 units 49% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost. a.7,500 b.8,101 c.7,660 d.9,001

Answer 1

Answer: b. 8,101 units

Explanation:

When using the FIFO method to cost inventories, the number of equivalent units for production takes into account the beginning inventory.

It is calculated as:

= (Beginning inventory * (1 - completion rate) ) + (Units completed - Opening inventory) + (Ending inventory * Completion rate)

= (500 * ( 1 - 68%)) + (8,000 - 500) + (900 * 49%)

= 160 + 7,500 + 441

= 8,101 units