Figure 6-9 Gill Corporation adds raw materials to production at the beginning of the process in the Assembly Department.Materials data for this department for March 2011 are as follows:
Beginning inventory was 70 percent complete.Ending inventory was 40 percent complete.
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Refer to Figure 6-9.How many equivalent units for conversion costs would there be for Gill Corporation in March using the FIFO method?

Question

Figure 6-9 Gill Corporation adds raw materials to production at the beginning of the process in the Assembly Department.Materials data for this department for March 2011 are as follows:
 Beginning inventory was 70 percent complete.Ending inventory was 40 percent complete.
-
Refer to Figure 6-9.How many equivalent units for conversion costs would there be for Gill Corporation in March using the FIFO method?

Quizplus · Accepted Answer

Using the FIFO method, we first calculate equivalent units for direct materials:
Beginning inventory: 70% of 90,000 = 63,000 units
Add: Units started and completed = 500,000 units
Total units accounted for = 563,000 units
Ending inventory: 40% of 90,000 = 36,000 units
Equivalent units for direct materials = 563,000 - 63,000 - 36,000 = 464,000 units
Next, we calculate equivalent units for conversion costs:
Beginning inventory: 70% of 90,000 = 63,000 units
Add: Units started and completed = 500,000 units
Total units accounted for = 563,000 units
Ending inventory: 40% of 90,000 = 36,000 units
Equivalent units for conversion costs = (563,000 - 63,000) - (500,000 - 439,500) - 36,000 = 101,500 units. Therefore, the answer is D.

Figure 6-9 Gill Corporation Adds Raw Materials to Production at the Beginning