During August,the Filtering Department of Speedwell,Inc.had a beginning Work-in-Process Inventory balance of 120 units with costs of $60,000.During the month,it started and completed 260 units.It had 30 units in the ending Work-in-Process Inventory.What is the number of equivalent units of production for transferred in units in the Filtering Department in August under the first-in,first-out (FIFO)method?
A) 120 units
B) 410 units
C) 290 units
D) 230 units

Question

Quizplus · Accepted Answer

Under the FIFO method, we only consider the units that were started and completed in the current period. The equivalent units for transferred in units would be equal to the units that were started and completed, which is 260 units. However, we also need to account for the work-in-process inventory at the end of the period, which has 30 units. These 30 units are partially completed and need to be converted into equivalent completed units of production. Since we are using the FIFO method, we assume that the ending work-in-process inventory consists of units that were started in the current period, and thus we take into account the work done on these units. Therefore, we multiply the ending work-in-process inventory by the percentage of completion to arrive at the equivalent completed units of production.

Equivalent units for transferred in units = units started and completed + (ending work-in-process inventory x percentage of completion) 
Equivalent units for transferred in units = 260 + (30 x 100%) 
Equivalent units for transferred in units = 290 units