Question

Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 40,000 units, 100% complete as to materials and 55% complete as to conversion. Units started and completed: 140,000. Units completed and transferred out: 180,000. Ending Inventory: 37,500 units, 100% complete as to materials and 25% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $58,000. Costs in beginning Work in Process - Conversion: $63,850. Costs incurred in February - Direct Materials: $302,000. Costs incurred in February - Conversion: $614,150. Calculate the equivalent units of conversion.

Answer 1

Answer:

The equivalent units of conversion is $167,375 units

Explanation:

The computation of the equivalent unit of conversion is shown below:

= (Beginning inventory units × remaining percentage)  + (units started and  completed units × completed percentage) + (ending inventory units × completed percentage)

= (40,000 units × 45%) + (140,000 units × 100%)  + (37,500 units × 25%)

= 18,000 units + 140,000 units + $9,375 units

= $167,375 units