The Miracle Company had 20,000 units in process on December 31,2016 which was 80% complete as to materials but only 40% complete as to conversion costs.The company's records show 40,000 units were transferred to the Finished Goods Inventory during January 2017.On January 31,2017,15,000 units were on hand which were 30% complete as to conversion costs and 60% complete as to materials.What are the equivalent units of production for the conversion costs in January,assuming Miracle uses first-in,first-out (FIFO)?

Question

Quizplus · Accepted Answer

To calculate the equivalent units of conversion costs, we need to add together the units that were completed during the period and the equivalent units of partially completed units at the end of the period.

Units completed during January = 40,000 units
Equivalent units of conversion costs for partially completed units at the end of January = (15,000 units × 30% complete) = 4,500 units
Equivalent units of conversion costs for units in process on December 31, 2016 = (20,000 units × 40% complete) = 8,000 units

Total equivalent units of production for conversion costs = 40,000 + 4,500 + 8,000 = 52,500
Since we are using FIFO, we do not need to adjust for any units that were started in a previous period and finished in the current period. Therefore, the answer is C) 36,500.

The Miracle Company Had 20,000 Units in Process on December