Farsat Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Units in process500 Percent complete with respect to materials80%Percent complete with respect to conversion20%Units started into production during the month20,000 Work in process, ending: Units in process600 Percent complete with respect to materials60%Percent complete with respect to conversion50% Required:Using the FIFO method, determine the equivalent units of production for materials and conversion costs.
What will be an ideal response?
FIFO method:
Units started and completed during the period = Units started into production during the period - Units in ending work in process inventory = 20,000 - 600 = 19,400
| Materials | Conversion | |
| To complete beginning work in process: | ||
| Materials: 500 units × (100% ? 80%) | 100 | |
| Conversion: 500 units × (100% ? 20%) | 400 | |
| Units started and completed | 19,400 | 19,400 |
| Ending work in process: | ||
| Materials: 600 units × 60% | 360 | |
| Conversion: 600 units × 50% | 300 | |
| Equivalent units of production | 19,860 | 20,100 |
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