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26 October, 09:08

Using the FIFO method, the number of equivalent units for conversion costs was a. 14,380 b. 14,550 c. 15,850 d. 14,400

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  1. 26 October, 09:22
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    Equivalent unit = 14380

    Step-by-step explanation:

    Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:

    On July 1:

    Beginning inventories 850 units, 60% complete

    Direct materials cost $5,000

    Conversion costs $4,000

    During July:

    Number of units started 15,000

    Direct materials added $155,000

    Conversion costs added $83,520

    On July 31:

    Ending inventories 1,600 units, 40% complete

    Using the FIFO method, the number of equivalent units of conversion costs was

    a. 15,850

    b. 14,550

    c. 14,380

    d. 14,400

    Number of Equivalent Unit for conversion = Beginning Inventory + Inventory Within + Ending Inventory

    Beginning Inventory = 850 * (1-60%)

    = 850 * (100% - 60%)

    = 850 * 40%

    = 850 * 0.4

    = 340

    Inventory Within = 15000 - 1600 = 13400

    Ending Inventory = 1600 * (40%)

    = 1600 * 40%

    = 1600 * 0.4

    = 640

    Number of Equivalent Unit = 340+13400+640

    = 14380
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