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 conversion costs 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 conversion costs are
A) 130,000. 
B) 144,000. 
C) 116,000. 
D) 135,600.

Quizplus · Accepted Answer

The equivalent units for conversion costs are 130,000. This is because the beginning work in process units are 10,000 and the units started and completed are 120,000. The units started and not completed are 0. The equivalent units for conversion costs are calculated as follows:Beginning work in process units: 10,000Units started and completed: 120,000Units started and not completed: 0Equivalent units for conversion costs: 130,000

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