Carmine Inc. creates all of its parts in the cutting department before they are passed on to the finishing department. Carmine adds the packaging material at the beginning of the finishing process. The finishing department had a beginning Work-in-Progress (WIP) Inventory of 450 units in April that were 74% complete with respect to Conversion Costs (CC). During April, the finishing department had 3,678 units Transferred-In (TI) from the cutting department and had completed 3,002 units by the end of the month. This left 1,126 units in ending inventory that were 50% complete with respect to CC. What are the equivalent units of production for April for TI, Direct Materials (DM), and CC under the First-In, First-Out (FIFO) method? (Round units to nearest whole number.)

Question

Quizplus · Accepted Answer

This question requires calculation of equivalent units for three different cost categories using the FIFO method. With FIFO, you should be focused on only units and costs added during the period, so beginning inventory will have to be evaluated separately. For Transferred-In and Direct Materials, this will be equal to (Units in Beginning WIP Inventory × Percentage of Costs Added) + (Units Transferred-In and Completed × Percentage of Costs Added) + (Units in Ending WIP Inventory × Percentage of Costs Added) = (450 units × 0%) + (2,552 units × 100%) + (1,126 units × 100%) = 0 + 2,552 units + 1,126 units = 3,678 units. For Conversion Costs, this will be equal to (Units in Beginning WIP Inventory × Percentage of Costs Added) + (Units Transferred-In and Completed × Percentage of Costs Added) + (Units in Ending WIP Inventory × Percentage of Costs Added) = (450 units × 26%) + (2,552 units × 100%) + (1,126 units × 50%) = 117 units + 2,552 units + 563 units = 3,232 units.