The following information pertains to Jones Company: Materials are added at the start of the process.
How many equivalent units for conversion costs would there be using the FIFO method?

Question

The following information pertains to Jones Company:  Materials are added at the start of the process.
How many equivalent units for conversion costs would there be using the FIFO method?

Quizplus · Accepted Answer

The FIFO method assumes that units completed and transferred out are composed of the units worked on first, so they do not include any partially completed units from beginning inventory. Therefore, the equivalent units for conversion costs are calculated based on the units started and completed in the current period (70,000 units) plus the partially completed units from the beginning inventory that were completed in the current period (9,600 units), for a total of 79,600 units. However, since the problem only asks for the equivalent units for conversion costs (which only takes into account the cost of labor and overhead), we must subtract the equivalent units for materials (22,000 units), leaving us with a final answer of 57,600 equivalent units for conversion costs.

The Following Information Pertains to Jones Company: Materials Are