Stephen Company uses the FIFO method in its process costing system.Beginning inventory in the mixing department consisted of 5,000 units that were 65 percent complete with respect to conversion costs.Ending work in process inventory consisted of 5,000 units that were 70 percent complete with respect to conversion costs.If 12,000 units were transferred to the next processing department during the period,the equivalent units for conversion costs would be
A)13,750 units.
B)12,250 units.
C)10,250 units.
D)13,000 units.

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs using FIFO are calculated by considering the work needed to complete the beginning inventory, the units started and completed during the period, and the work done on the ending inventory. The calculation is: (5,000 units x 35% to complete) + (12,000 units - 5,000 units) + (5,000 units x 70%) = 1,750 + 7,000 + 3,500 = 12,250 units.

Stephen Company Uses the FIFO Method in Its Process Costing