The Miracle Company had 20,000 units in process on December 31, 2020 which was 80% complete as to materials but only 40% complete as to conversion costs. The company's records show 40,000 units were transferred to the Finished Goods Inventory during January 2021. On January 31, 2021, 15,000 units were on hand which were 30% complete as to conversion costs and 60% complete as to materials. What are the equivalent units of production (EUPs) for the conversion costs in January, assuming Miracle uses first-in, first-out (FIFO)?
A) 34,000 EUPs
B) 35,000 EUPs
C) 36,500 EUPs
D) 41,500 EUPs

Question

Quizplus · Accepted Answer

To calculate the equivalent units of production (EUPs) for conversion costs using FIFO, consider the work needed to complete the beginning inventory, the units started and completed during the period, and the work done on the ending inventory. For the beginning inventory, 20,000 units were 40% complete, so 60% of the work was needed (20,000 * 60% = 12,000 EUPs). For the units started and completed, 40,000 units were transferred out, so 20,000 units were started and completed (40,000 - 20,000 = 20,000 EUPs). For the ending inventory, 15,000 units were 30% complete, so 4,500 EUPs (15,000 * 30%). Total EUPs = 12,000 + 20,000 + 4,500 = 36,500 EUPs.

The Miracle Company Had 20,000 Units in Process on December