Ozdemir Corporation uses the first-in, first-out method in its process costing system. Data concerning the first processing department for the most recent month are listed below: What are the equivalent units for conversion costs for the month in the first processing department?
A) 490
B) 4,300
C) 4,970
D) 5,200

Question

Ozdemir Corporation uses the first-in, first-out method in its process costing system. Data concerning the first processing department for the most recent month are listed below:  What are the equivalent units for conversion costs for the month in the first processing department?
A) 490 
B) 4,300 
C) 4,970 
D) 5,200

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated by adding the equivalent units for partially completed units at the end of the period to the equivalent units for units completed during the period. In this case, the equivalent units for partially completed units are 270, calculated as follows:

- Units in ending work in process inventory: 500
- Percentage completion for conversion costs: 60%
- Equivalent units for conversion costs: 500 x 60% = 300 units
- Units started during the period: 4,700
- Total equivalent units for units completed during the period: 4,700

Therefore, the total equivalent units for conversion costs for the month in the first processing department are 4,970, calculated as follows:

- Equivalent units for partially completed units: 300
- Equivalent units for units completed during the period: 4,700
- Total equivalent units for conversion costs: 300 + 4,700 = 4,970

Ozdemir Corporation Uses the First-In, First-Out Method in Its Process