Tina is a cost accountant for Fey Industries, a factory that produces lemon-scented alcohol wipes that it distributes by the container. With cold and flu season right around the corner, Fey would like to make sure they have all of their process cost accounting information configured as soon as possible. Tina has gathered the following information about their inventory:
Using the First-In, First-Out (FIFO) method of process costing, what are the equivalent units of production for the year for both Conversion Costs and Direct Materials? (Round final answer to the nearest unit)

Question

Tina is a cost accountant for Fey Industries, a factory that produces lemon-scented alcohol wipes that it distributes by the container. With cold and flu season right around the corner, Fey would like to make sure they have all of their process cost accounting information configured as soon as possible. Tina has gathered the following information about their inventory:
 Using the First-In, First-Out (FIFO) method of process costing, what are the equivalent units of production for the year for both Conversion Costs and Direct Materials? (Round final answer to the nearest unit)

Quizplus · Accepted Answer

This question requires familiarity with calculating equivalent units for two different costs while also taking FIFO into account, so that means that beginning inventory will be factored in separately. To calculate the number of units left in ending inventory, determine how many units to account for which includes adding the beginning inventory of 1,346 to the units started during the period of 43,750 for a total of 45,096. Next, subtract the number of units completed and removed, 38,622, to arrive at an ending inventory of 6,474 units. For the Direct Materials, add the following: (1,346 × 0%) + (37,276 × 100%) + (6,474 × 100%) = 43,750 units. For Conversion Costs, add the following: (1,346 × 40%) + (37,276 × 100%) + (6,474 × 33%) = 538.40 + 37,276 + 2,136.42 = 39,951 units.

Tina Is a Cost Accountant for Fey Industries, a Factory