CAF-5 · Chapter 17 · Question 15 of 20
(Process Costing: FIFO Equivalent Units) At the start of the month, Work-In-Process was 2,000 units (60% complete as to conversion). During the month, 10,000 units were started. At the end of the month, 3,000 units remained in WIP (40% complete as to conversion). Assuming FIFO is used and materials are added at the beginning of the process, what are the Equivalent Units of Production for conversion costs?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 9,000 units
Explanation
Under FIFO, equivalent units evaluate work done in the current period. Total output = 2,000 (Op) + 10,000 (Started) - 3,000 (Cl) = 9,000 units completed. Completed from Op WIP = 2,000 units * 40% (remaining to finish) = 800 EU. Started & Completed = 7,000 units * 100% = 7,000 EU. Closing WIP = 3,000 units * 40% (completed this period) = 1,200 EU. Total Conversion EU = 800 + 7,000 + 1,200 = 9,000 units.
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