Kirkpatrick Company uses a process-cost system with the FIFO method of accounting for beginning inventories. Materials are added at the beginning of the process, and conversion costs are incurred uniformly. Work-in-process at the beginning is assumed to be 40 percent complete and at the end to be 70 percent complete. Additional data follow:

-The equivalent units for materials are
A) 130,000.
B) 144,000.
C) 116,000.
D) 135,600.

Question

Kirkpatrick Company uses a process-cost system with the FIFO method of accounting for beginning inventories. Materials are added at the beginning of the process, and conversion costs are incurred uniformly. Work-in-process at the beginning is assumed to be 40 percent complete and at the end to be 70 percent complete. Additional data follow:
 
-The equivalent units for materials are
A) 130,000. 
B) 144,000. 
C) 116,000. 
D) 135,600.

Quizplus · Accepted Answer

The equivalent units for materials are calculated based on the units completed and transferred out plus the equivalent units in ending inventory. In this case, the correct calculation leads to 130,000 equivalent units.

Kirkpatrick Company Uses a Process-Cost System with the FIFO Method