D.Q. Company uses the FIFO method in its process costing system. Beginning inventory in the mixing department consisted of 6,000 units that were 75 percent complete with respect to conversion costs. Ending work in process inventory consisted of 5,000 units that were 60 percent complete with respect to conversion costs. If 12,000 units were transferred to the next processing department during the period, the equivalent units for conversion costs would be
A) 12,500 units.
B) 10,500 units.
C) 13,500 units.
D) 13,000 units.

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated by adding the units transferred out to the equivalent units in ending inventory, minus the equivalent units in beginning inventory. Here, it is 12,000 units transferred out + (5,000 units * 60%) - (6,000 units * 75%) = 10,500 units.

DQ Company Uses the FIFO Method in Its Process Costing