ACCA Applied Knowledge · Management Accounting · Cost accounting methods
A company uses the FIFO method in a process. Opening work-in-progress was 1,000 units, 60% complete for conversion. 7,000 units were started in the period. Closing work-in-progress was 2,000 units, 25% complete for conversion. What are the equivalent units of conversion work done in the period under FIFO?
Under FIFO the conversion equivalent units are 5,900. This is 400 to finish the opening work-in-progress, 5,000 units started and finished, and 500 for closing work-in-progress. None of the listed options matches.
- A6,500Correct
- B6,900
- C6,100
- D7,100
Explanation
Units completed = 1,000 + 7,000 - 2,000 = 6,000. FIFO equivalent units = opening completion (1,000 x 40% = 400) + started and finished (5,000) + closing (2,000 x 25% = 500) = 5,900.
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