The following unit data were assembled for the heating process of Morgan Processing, Inc., for the month of August. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO process costing method. The number of equivalent units produced with respect to conversion costs is
A) 43,700.
B) 45,700.
C) 48,200.
D) 50,200.

Question

The following unit data were assembled for the heating process of Morgan Processing, Inc., for the month of August. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO process costing method.  The number of equivalent units produced with respect to conversion costs is
A) 43,700. 
B) 45,700. 
C) 48,200. 
D) 50,200.

Quizplus · Accepted Answer

To find the equivalent units for conversion costs, we need to add up the units completed and the equivalent units for units in process at the end of the month. The units completed are 42,000 (completed and transferred out). The equivalent units for units in process at the end of the month are 3,700 (100% complete for materials and 40% complete for conversion costs). Therefore, the total equivalent units for conversion costs is 42,000 + 3,700 = 45,700. The answer is B.

The Following Unit Data Were Assembled for the Heating Process