(Appendix 6A)Herston Company uses the FIFO method in its process costing system.The beginning work-in-process inventory in a particular department consisted of 6,000 units,two-thirds complete with respect to conversion costs.During the month,42,000 units were started and 40,000 units were completed and transferred out of the department.The company had 40,000 equivalent units of production for conversion costs.Which of the following represents the ending work-in-process inventory in the department? (Do not round intermediate calculations. )
A) 8,000 units,25% complete with respect to conversion costs.
B) 0 units.
C) 8,000 units,50% complete with respect to conversion costs.
D) 4,000 units,100% complete with respect to conversion costs.Therefore,40,000 - 36,000 = 4,000 EU in EI.EI consists of 6,000 + 42,000 - 40,000 = 8,000 units 50% complete (4,000/8,000).

Question

Quizplus · Accepted Answer

The ending work-in-process inventory consists of the remaining units that were started but not completed during the period. In this case, it is calculated as 6,000 + 42,000 - 40,000 = 8,000 units. These units are two-thirds complete with respect to conversion costs, so we need to multiply 8,000 by 0.5 to find the equivalent units of production for conversion costs, which gives us 4,000. Therefore, the ending work-in-process inventory is 8,000 units, 50% complete with respect to conversion costs. Choice C is the correct answer.

(Appendix 6A)Herston Company Uses the FIFO Method in Its Process