Ormandy Company uses a FIFO process costing system.The company had 5,000 units that were 60 percent complete as to conversion costs at the beginning of the month.The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs.What are equivalent units for material,if material is added at the beginning of the process?

Question

Quizplus · Accepted Answer

Since the company is using a FIFO process, we do not need to factor in the beginning 5,000 units that were partially complete as they were started in a previous period. Therefore, we only need to calculate the equivalent units for the 22,000 units started this period. Since material is added at the beginning of the process, all 22,000 units are 100% complete as to materials. Therefore, the equivalent units for material is 22,000.

Ormandy Company Uses a FIFO Process Costing System