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 for conversion costs.The ending work in process inventory in the department consisted of:
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

Question

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 for conversion costs.The ending work in process inventory in the department consisted of:
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

Quizplus · Accepted Answer

FIFO method
Units started and completed during the period = Units completed during the period - Units in beginning work in process inventory = 40,000 - 6,000 = 34,000
 11eaa48f_7bcf_1992_9e4a_8d9522d9a075_TB2485_00 2,000 + 34,000 + X = 40,000
X = 40,000 - 2,000 - 34,000 = 4,000
Units in beginning work in process inventory + Units started into production during the period = Units in ending work in process inventory + Units completed during the period
6,000 + 42,000 = Y + 40,000
Y = 6,000 + 42,000 - 40,000 = 8,000
Y F1F1F1S1F1F1F10 Z = X
8,000 F1F1F1S1F1F1F10 Z = 4,000
Z = 4,000 F1F1F1S1F1F1F10 8,000 = 0.50

Herston Company Uses the FIFO Method in Its Process Costing