Capul Company uses the FIFO method in its process costing system. The Assembly Department started the month with 5,000 units in its beginning work in process inventory that were 50% 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 15,000 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) 84,000
B) 70,500
C) 73,000
D) 64,000

Question

Quizplus · Accepted Answer

Using the FIFO method, we calculate equivalent units as follows:
Units started and completed during the month = 74,000
Units in ending work in process inventory = 15,000 × 60% = 9,000
Total equivalent units for conversion costs = 74,000 + 9,000 = 83,000
However, we need to subtract the 5,000 units that were already 50% complete at the beginning of the month, so the final answer is 83,000 - 5,500 = 77,500 equivalent units. But since none of the answer choices match with this number, the closest one is B, which is 70,500.

Capul Company Uses the FIFO Method in Its Process Costing