Garson Corporation uses the FIFO method in its process costing system. The Grinding Department started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. An additional 98,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 115,000 units were completed in the Grinding Department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the Grinding Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Grinding Department for the month?
A)81,000
B)115,200
C)115,000
D)113,400

Question

Quizplus · Accepted Answer

Equivalent units for conversion costs can be calculated as follows:

Units completed and transferred out + (Equivalent units in ending work in process inventory × Percentage complete with respect to conversion costs)
= 115,000 + (1,000 × 20%)
= 115,000 + 200
= 115,200

Therefore, the equivalent units for conversion costs in the Grinding Department for the month are 113,400 (98,000 units transferred in + 18,000 beginning work in process units × 90% complete + 1,000 ending work in process units × 20% complete). The closest option to this answer is D).

Garson Corporation Uses the FIFO Method in Its Process Costing