Intask Corporation uses the first-in, first-out method in its process costing system. Beginning inventory in the mixing department consisted of 7,100 units that were 75% complete with respect to conversion costs. Ending work in process inventory consisted of 6,100 units that were 60% complete with respect to conversion costs. If 14,200 units were transferred to the next processing department during the period, the equivalent units of production for conversion cost would be:
A) 14,975 units
B) 12,535 units
C) 15,975 units
D) 15,200 units

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for the units started and completed during the period:

Units started and completed = Units transferred out + Ending work in process inventory - Beginning work in process inventory
Units started and completed = 14,200 + 6,100 - 7,100
Units started and completed = 13,200 units

Next, we need to calculate the equivalent units of production for the beginning work in process inventory and the ending work in process inventory:

Equivalent units of production for beginning inventory = Units in beginning inventory x % complete
Equivalent units of production for beginning inventory = 7,100 x 75%
Equivalent units of production for beginning inventory = 5,325 units

Equivalent units of production for ending inventory = Units in ending inventory x % complete
Equivalent units of production for ending inventory = 6,100 x 60%
Equivalent units of production for ending inventory = 3,660 units

Finally, we can calculate the total equivalent units of production for conversion costs:

Total equivalent units of production for conversion costs = Equivalent units of production for units started and completed + Equivalent units of production for beginning inventory + Equivalent units of production for ending inventory
Total equivalent units of production for conversion costs = 13,200 + 5,325 + 3,660
Total equivalent units of production for conversion costs = 12,535 units

Therefore, the answer is B.

Intask Corporation Uses the First-In, First-Out Method in Its Process