Jordan is a cost accountant at Barkley Inc, a factory that manufactures modern black candlesticks. Jordan is in the process of updating all of their records and has gathered the following process costing information for their Conversion Costs (CC):
Beginning Work-in-Progress (WIP) Inventory: 950 units, 23% completed
Units Started During the Period: 32,000
Units Completed by the End of the Period: 26,400
Ending WIP Inventory: 88% completed
Barkley adds both Conversion Costs and Direct Material (DM) resources evenly throughout the process. What are the equivalent units of production if Barkley employs the First-In, First-Out (FIFO) method? (Round your final answer to the nearest whole unit.)

Question

Quizplus · Accepted Answer

This question requires the calculation of equivalent units of production using the FIFO method, and that means including beginning inventory in the calculation. First, determine how many units to account for which includes adding the beginning WIP inventory of 950 to the units started during the period of 32,000 for a total of 32,950. Next, subtract the number of units completed and removed, 26,400, to arrive at an ending WIP inventory of 6,550 units. The equivalent units under the FIFO method will be equal to the beginning units times their percentage of completion (950 × 77%) plus units started and completed times their percentage of completion ((32,000 - 6,550) × 100%) plus the units in ending inventory times their percentage of completion (6,550 × 88%). 732 + 25,450 + 5,764 = 31,946 units.

Jordan Is a Cost Accountant at Barkley Inc, a Factory