Carson Company uses the FIFO method in its process costing system.The Assembly Department started the month with 6,000 units in its beginning work-in-process inventory; 20% of the units were complete with respect to conversion costs.An additional 74,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department.Of the 8,000 units in the ending work-in-process inventory of the Assembly Department,60% were complete with respect to conversion costs.
What were the equivalent units of production for conversion costs in the Assembly Department for the month?
A) 72,000 units.
B) 75,600 units.
C) 76,000 units.
D) 76,800 units.

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated by adding the units completed and transferred out to the equivalent units in ending WIP, minus the equivalent units in beginning WIP. Here, 72,000 units were completed and transferred out (80,000 total units - 8,000 ending WIP), plus 4,800 equivalent units in ending WIP (8,000 units * 60%), minus 1,200 equivalent units in beginning WIP (6,000 units * 20%), resulting in 75,600 equivalent units.

Carson Company Uses the FIFO Method in Its Process Costing