Winkle Company uses the FIFO method in its process costing system.At the beginning of March,the work-in-process inventory in the Blending Processing Center consisted of 5,000 units,90% complete with respect to conversion costs.At the end of the month,the work-in-process inventory consisted of 2,000 units that were 60% complete with respect to conversion costs.If 10,000 units were transferred to the next processing center during the month,what would be the equivalent units of production for conversion costs?
A) 6,700 units.
B) 11,700 units.
C) 10,300 units.
D) 13,000 units.

Question

Quizplus · Accepted Answer

To calculate the equivalent units of production for conversion costs, we need to calculate the equivalent units of production for the beginning work-in-process inventory, units started and completed during the month, and the ending work-in-process inventory.

Equivalent units of production for the beginning work-in-process inventory: 
5,000 units x 90% = 4,500 units

Equivalent units of production for units started and completed during the month:
10,000 units

Equivalent units of production for the ending work-in-process inventory:
2,000 units x 60% = 1,200 units

Total equivalent units of production for conversion costs:
4,500 units + 10,000 units + 1,200 units = 15,700 units
However, since we are using FIFO method, the equivalent units of production will be limited to the units transferred out of the first processing center, which is 10,000 units.

Therefore, the correct answer is A) 6,700 units. 
(4,500 units + 1,200 units + 1,000 units = 6,700 units)

Winkle Company Uses the FIFO Method in Its Process Costing