Question

Conlon Chemicals manufactures paint thinner. Information on the work in process follows:

• Beginning inventory, 39,000 partially complete gallons.

• Transferred out, 213,000 gallons.

• Ending inventory (materials are 20 percent complete; conversion costs are 12 percent complete).

• Started this month, 244,000 gallons.

Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs

Required:

a. Compute the equivalent units for materials using FIFO.

b. Compute the equivalent units for conversion costs using FIFO.

Answer 1

a
Equivalent units for materials using FIFO = 207500
b
Equivalent units for conversion costs using FIFO = 209700
Workings:
	Materials	Conversion Costs
To complete beginning inventory:
Materials: 50%× 39,000 units	19500
Conversion costs: 70% × 39,000 units		27300
Started and completed during the period	174000	174000
Units still in ending inventory:
Materials: 20%× 70,000 units	14000
Conversion costs: 12% × 70,000 units		8400
Equivalent units (gallons)	207500	209700