As of June 1, Jelly and Telly Company had 2,000 units that were 100% complete with respect to Direct Materials (DM) and 80% complete with respect to Conversion Costs (CC). During the month of June, Jelly and Telly started 8,000 units and a total of 9,000 units were completed and removed from Work-in-Progress (WIP) Inventory. On June 30, they had 1,000 units remaining in inventory that were 100% complete with respect to Direct Materials and 40% complete with respect to Conversion Costs. Find the total equivalent units of Conversion Costs for the month of June if the company follows the First-In, First-Out (FIFO) method.

Question

Quizplus · Accepted Answer

Under the FIFO Method, the Total Equivalent Units of Conversion Costs = (Units in Beginning WIP Inventory × Percentage of Resource Added this Period) + (Units Started and Completed this Period × Percentage of Resource Added this Period) + (Units in Ending WIP Inventory × Percentage of Resource Added this Period).
Therefore, (2,000 units × 20%) + (7,000 units × 100%) + (1,000 units × 40%) = 400 units + 7,000 units + 400 units = 7,800 units

As of June 1, Jelly and Telly Company Had 2,000