Department M had 2,700 units 54% completed in process at the beginning of June, 12,300 units completed during June, and 1,000 units 29% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories

Total equivalent unit = 1,242 + 9,600 + 290 = 11,132 units

Explanation:

Explanation:

Equivalent units are used to apportion cost between completed units and work in progress. They represent notional whole units which represent incomplete work.

Under the first in first method, to account for completed units during a production period the opening inventory units are assumed to completed first before newly the newly introduced units.

So we can work out the equivalents units as follows:

Fully worked units : These represent units started this period of production and completed in the same period.

Fully worked = 12300 - 2700=9600

Item Workings Equivalent unit

Opening inventory (100-54) % * 2,700 = 1,242

Fully worked (100% * 9600) = 9,600

Closing inventory (29% * 1000) = 290

Total equivalent units 11,132

Total equivalent unit = 1,242 + 9,600 + 290 = 11,132 units

Note that for the opening inventory already 54% work has been done the preceding period, so the balance of 46% would be done in this current period.