Question

DeFond Company has a process costing system. All materials are introduced at the beginning of the process in Department One. The following information is available for the month of January: Work in process, July 1 (40% complete for conversion) Started Completed and transferred to Department 2 Work in process, July 31 (60% complete for conversion) Units 370 1,850 1,750 470 What are the equivalent units for the month of July if the company uses the FIFO method? Materials Conversion A) 2,220 1,850 B) 2,220 1,884 c) 2,220 2,032 D) 1,850 1,884 E) 1,850 2,032

Answer 1

Correct Answer:

Option d:

	Material	conversion
d	1850	1884

Working:

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed	% completed this period
	Material	Conversion	Material	Conversion
Beginning WIP	370	100%	40%	0%	60%
Units introduced	1,850
Total units to be accounted for	2,220
Completed and Transferred unit	1,750	0%	0%	100%	100%
Ending WIP	470			100%	60%

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material	Conversion
Units Transferred:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	370	0%	-	60%	222
From units started/Introduced	1,380	100%	1,380	100%	1,380
Total	1,750		1,380		1,602
	Total Units	Material	Conversion
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	470	100%	470	60%	282
Total EUP	2,220		1,850		1,884

End of Answer.

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