Department R had 4,000 units in work in process that were 74% completed as to la

Question

Department R had 4,000 units in work in process that were 74% completed as to labor and overhead at the beginning of the period; 29,100 units of direct materials were added during the period; 30,100 units were completed during the period; and 3,000 units were 31% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was

a. 32,070 b. 30,100 c. 37,100 d. 28,070

Explanation / Answer

Equivalent units under FIFO method are calculated using the formula as:

Equivalent units for each cost component = (100% A) × B + C + D × E

Where,
A = percentage of completion at the end of last period
B = units in opening work in process
C = units added and completed during the period
D = percentage of completion of units in closing work in process
E = units in closing work in process

Equivalent units for conversion cost = [(100% - 74%) x 4,000] + 30,100 + (3,000 x 0.31)

= (0.26 x 4,000) + 30,100 + 930

= 1,040 +30,100 + 930 = 32,070 units

Hence option “a. 32,070” is correct answer.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.