Collins Chemicals produces a compound through two processes. For its second process for a particular period, Collins had an opening WIP inventory of 100 units halfway through the process; 2300 units completed in the period; and a closing WIP inventory of 400 units three-quarters of the way through the process. Materials are added at the beginning of the process and conversion costs are incurred uniformly. Calculate the equivalent units for transferred in costs for the period if the firm used FIFO costing.
A) 2300
B) 2400
C) 2500
D) 2600

Question

Quizplus · Accepted Answer

The equivalent units for transferred in costs are the same as the equivalent units for materials, which can be calculated as follows:

Units started and completed in the period = 2300
Equivalent units for opening WIP inventory = 100 x 75% = 75
Equivalent units for closing WIP inventory = 400 x 25% = 100
Total equivalent units = 2300 + 75 + 100 = 2475

However, since we are using FIFO costing, we only consider the units started and completed in the period and the opening WIP inventory. Therefore, the equivalent units for transferred in costs will be the same as the units started and completed in the period, which is 2300.

Therefore, the best choice is D, 2600.

Collins Chemicals Produces a Compound Through Two Processes