Heara Ltd manufactures metal sheets, and uses the FIFO process costing. On 1 May the Rolling Department had 3000 units work in progress, which were 50 per cent completed as to conversion costs. During May 8000 units were completed and transferred out. The remaining work in progress on 30 May was 2000 units at 50 per cent complete in terms of conversion rate. What is the equivalent unit of conversion?
A) 2000 units
B) 7500 units
C) 9000 units
D) 10 500 units

Question

Quizplus · Accepted Answer

The equivalent units of conversion for the period are calculated by adding the units completed and transferred out (fully 100% converted, so 8000 units) to the equivalent units for the ending work in progress based on their percentage completion (2000 units at 50% completion = 1000 equivalent units). Therefore, 8000 units + 1000 units = 9000 equivalent units.

Heara Ltd Manufactures Metal Sheets, and Uses the FIFO Process