11) Aquamarine Company produces car batteries. The following information is prov
ID: 2537923 • Letter: 1
Question
11)
Aquamarine Company produces car batteries. The following information is provided for the month of April with respect to conversion costs:
Units
Work-in-process (WIP) inventory, April 1 (30% complete)
6,000
Units transferred in
30,000
Work-in-process inventory, April 30 (60% complete)
4,000
Materials are added at the start of the process.
Compute the equivalent units with respect to conversion costs using the first-in, first-out method?
(0.5pts)
27,000 units
30,200 units
26,000 units
32,600 units
Units
Work-in-process (WIP) inventory, April 1 (30% complete)
6,000
Units transferred in
30,000
Work-in-process inventory, April 30 (60% complete)
4,000
Explanation / Answer
Solution:
Opening WIP = 6000 units
Units Transferred in = 30000 units
Ending WIP = 4000 units
Units completed = 6000 + 30000 - 4000 = 32000
Units completed out of opening WIP = 6000 units
Equivalent unit of conversion for units completed out of opening WIP = 6000*70% = 4200 units
Equivalent unit of conversion for unit transferred and completed during the period = 32000 - 6000 = 26000 units
Equivalent unit of conversion in ending WIP = 4000*60% = 2400 units
Total equivalent unit with respect to conversion using FIFO = 4200 + 26000 + 2400 = 32600 units
Hence last option is the right choice.
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