Anzalone Corporation adds raw materials to production at the beginning of the process in the Assembly Department. Materials data for this department for May 2018 are as follows: $$\begin{array} { | l | r | r | r | }
\hline & & { \text { Costs } } \
\hline & \text { Units } & \text { Materials } & { \text { Conversion } } \
\hline \text { Work in process, May 1 } & 25,000 & \$ 68,750 & \$ 167,650 \
\hline \text { Started during May } & 100,000 & 300,000 & 903,350 \
\hline \text { Work in process, May 31 } & 10,000 & & \
\hline
\end{array}$$ Beginning inventory was 70 percent complete. Ending inventory was 40 percent complete. How many equivalent units for conversion costs would there be for Anzalone Corporation in May using the FIFO method?

Question

Anzalone Corporation adds raw materials to production at the beginning of the process in the Assembly Department. Materials data for this department for May 2018 are as follows: $$\begin{array} { | l | r | r | r | } 
\hline & &  { \text { Costs } } \
\hline & \text { Units } & \text { Materials } & { \text { Conversion } } \
\hline \text { Work in process, May 1 } & 25,000 & \$ 68,750 & \$ 167,650 \
\hline \text { Started during May } & 100,000 & 300,000 & 903,350 \
\hline \text { Work in process, May 31 } & 10,000 & & \
\hline
\end{array}$$ Beginning inventory was 70 percent complete. Ending inventory was 40 percent complete. How many equivalent units for conversion costs would there be for Anzalone Corporation in May using the FIFO method?

Quizplus · Accepted Answer

To calculate the equivalent units for conversion costs using the FIFO method, we first determine the units completed and transferred out, then calculate the equivalent units for the work done on the beginning inventory and the work done in the current period.1. Units completed and transferred out = (Beginning inventory units + Units started during May) - Ending inventory units = (25,000 + 100,000) - 10,000 = 115,000 units.2. Equivalent units for beginning inventory: Since the beginning inventory was 70% complete, it means that 30% of the conversion work was remaining. Therefore, for the 25,000 units in beginning inventory, the equivalent units for conversion costs to complete them = 25,000 units * 30% = 7,500 units.3. Equivalent units for units started and completed in May: Since all units started during May either were completed or are in ending inventory, and since we've already accounted for the beginning inventory, the equivalent units for the units started and completed in May = Units completed and transferred out - Beginning inventory = 115,000 units - 25,000 units = 90,000 units.4. Equivalent units for ending inventory: The ending inventory was 40% complete, so the equivalent units for conversion costs for the ending inventory = 10,000 units * 40% = 4,000 units.5. Total equivalent units for conversion costs = Equivalent units for beginning inventory + Equivalent units for units started and completed in May + Equivalent units for ending inventory = 7,500 units + 90,000 units + 4,000 units = 101,500 units.

Anzalone Corporation Adds Raw Materials to Production at the Beginning