Department S had 500 units 60% completed in process at the beginning of the period, 9,000 units completed during the period, and 600 units 30% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.
A) 8,880
B) 9,300
C) 8,700
D) 9,000

Question

Quizplus · Accepted Answer

Under the FIFO method, the first step is to complete the beginning inventory. The 500 units that were 60% complete need an additional 40% to be completed. Therefore, for the beginning inventory, the equivalent units for conversion are 500 units * 40% = 200 units. Next, all the units completed during the period (9,000 units) are counted as equivalent units since they were completed from start to finish during the period. Finally, for the ending inventory, the 600 units that are 30% complete contribute 600 units * 30% = 180 equivalent units for conversion. Adding these together: 200 (from beginning inventory completion) + 9,000 (units completed during the period) + 180 (from ending inventory) = 9,380 equivalent units. However, since this option is not available and my calculation seems to have an error, let's correct the approach based on the provided options and the FIFO method.Correcting the approach: For the FIFO method, we do not count the work done on the beginning inventory before the current period. Therefore, we only consider the units completed during the period and the work done on the ending inventory. The correct calculation should only include the 9,000 units completed during the period plus the additional work done on the ending inventory (600 units at 30% completion, which equals 180 units). However, my initial explanation mistakenly included the beginning inventory's completion progress, which is not considered in FIFO for calculating equivalent units. Given the options and the correct understanding of FIFO, the calculation error points to a misunderstanding of how to apply the FIFO method correctly in this context. The correct answer should reflect the total work done during the period on units fully completed and partially completed (ending inventory), excluding the beginning inventory's progress from the previous period.

Department S Had 500 Units 60% Completed in Process at the Beginning