Ampco Disk Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for August 20X5: Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (90% complete)
Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (65% complete)
Calculate equivalent units for conversion costs using the FIFO method.
A)401,500 units
B)350,000 units
C)300,000 units
D)292,500 units

Question

Ampco Disk Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for August 20X5:  Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (90% complete)
  Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (65% complete)
Calculate equivalent units for conversion costs using the FIFO method.
A)401,500 units 
B)350,000 units 
C)300,000 units 
D)292,500 units

Quizplus · Accepted Answer

According to the FIFO method, units in beginning inventory are completed first, followed by units started and completed during the current period, and finally, units started but not completed at the end of the period. Using this method, the equivalent units for conversion costs would be:
Beginning inventory: 50,000 units x 90% = 45,000
Current period: 300,000 units x 90% = 270,000
Ending inventory: 50,000 units x 65% = 32,500
Total equivalent units = 45,000 + 270,000 + 32,500 = 347,500
Therefore, the best choice is D) 292,500 units because only the equivalent units for conversion costs are asked for.

Ampco Disk Company Operates a Computer Disk Manufacturing Plant