Carson Corporation 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 that were 20% 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. There were 8,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?
A)72,000
B)75,600
C)76,000
D)76,800

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated by considering the work needed to complete the beginning inventory, the units started and completed during the month, and the work done on the ending inventory. For the beginning inventory, 80% of the work is needed (6,000 units * 80% = 4,800 units). For the units started and completed, it's 66,000 units (74,000 units transferred in - 8,000 units in ending inventory). For the ending inventory, 60% of the work is needed (8,000 units * 60% = 4,800 units). Adding these gives 4,800 + 66,000 + 4,800 = 75,600 equivalent units.

Carson Corporation Uses the FIFO Method in Its Process Costing