Figure 6-9
Anzalone Corporation adds raw materials to production at the beginning of the process in the Assembly Department. Materials data for this department for May 2016 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 Anzalone Corporation in May using the FIFO method?

Question

Figure 6-9
Anzalone Corporation adds raw materials to production at the beginning of the process in the Assembly Department. Materials data for this department for May 2016 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 Anzalone Corporation in May using the FIFO method?

Quizplus · Accepted Answer

The FIFO method assumes that units completed and transferred out are taken from the earliest units added to work in process. Using the FIFO method, the equivalent units for conversion costs would be:
Units started and completed = 90,000 (100,000 units - 10,000 units in ending inventory)
Equivalent units from beginning inventory = 70% x 10,000 = 7,000 units
Equivalent units from ending inventory = 40% x 10,000 = 4,000 units
Total equivalent units for conversion costs = 90,000 + 7,000 + 4,000 = 101,000 units. Therefore, the best choice is D.

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