Reference: 04-11
The following data relate to the Forming Department of Jimbob Co. for a recent month: $$\begin{array} { | l | l | l | }
\hline & \begin{array} { l }
\text { Number of } \
\text { Units }
\end{array} & \begin{array} { l }
\text { Conversion Costs } \
\text { (Percent Complete) }
\end{array} \
\hline \text { Beginning work in process inventory } & 9,000 & 60 \% \
\hline \text { Units started into production } & 45,000 & - \
\hline \text { Units completed and transferred out } & 46,000 & - \
\hline \text { Ending work in process inventory } & 8,000 & 25 \% \
\hline
\end{array}$$ All materials are added prior to the beginning of work in the Forming Department.
-Assuming that Jimbob Co. uses the FIFO method, the equivalent units of production for conversion costs would be?
A)48,000 units.
B)46,000 units.
C)42,600 units.
D)44,400 units.

Question

Reference: 04-11
The following data relate to the Forming Department of Jimbob Co. for a recent month: $$\begin{array} { | l | l | l | } 
\hline & \begin{array} { l } 
\text { Number of } \
\text { Units }
\end{array} & \begin{array} { l } 
\text { Conversion Costs } \
\text { (Percent Complete) }
\end{array} \
\hline \text { Beginning work in process inventory } & 9,000 & 60 \% \
\hline \text { Units started into production } & 45,000 & - \
\hline \text { Units completed and transferred out } & 46,000 & - \
\hline \text { Ending work in process inventory } & 8,000 & 25 \% \
\hline
\end{array}$$ All materials are added prior to the beginning of work in the Forming Department.
-Assuming that Jimbob Co. uses the FIFO method, the equivalent units of production for conversion costs would be?
A)48,000 units.
B)46,000 units.
C)42,600 units.
D)44,400 units.

Quizplus · Accepted Answer

Under the FIFO method, the equivalent units of production for conversion costs are calculated by adding the completed units' conversion costs to the equivalent units of conversion costs in the ending work in process, after adjusting for the work done on the beginning inventory. Calculation: Units completed and transferred out = 46,000 units (these are 100% complete for conversion costs). For the ending work in process: 8,000 units * 25% = 2,000 equivalent units. For the beginning work in process, since materials are added before the forming department and we're focusing on conversion costs with the FIFO method, we only consider the work needed to complete these units during the current period. The beginning inventory had 9,000 units 60% complete, but since we're using FIFO, we focus on the work done this period, which means we don't add the beginning inventory's conversion efforts again. Thus, equivalent units for conversion costs = 46,000 (completed and transferred out) + 2,000 (from ending WIP) = 48,000. However, we need to adjust for the progress made on the beginning inventory, which was already 60% complete. Since all materials are added at the beginning and we're looking at conversion costs with the FIFO method, the calculation provided directly leads to an incorrect conclusion without the proper adjustment for the beginning inventory's state of completion. The correct approach involves recognizing that the beginning inventory's conversion work does not need to be completed again and focusing on the units processed during the current period. Therefore, the correct calculation should consider the units completed and the work done on the ending inventory without improperly adjusting for the beginning inventory's state of completion under the FIFO method. This indicates a misunderstanding in the explanation provided, as the calculation for equivalent units should directly account for the work done during the current period, leading to a reevaluation of the correct answer based on the provided data and the principles of the FIFO costing method.

Reference: 04-11 the Following Data Relate to the Forming Department

Reference: 04-11
the Following Data Relate to the Forming Department