CMA Intermediate · Cost Accounting · Process Costing
A process has opening WIP of 1,000 units (60% complete as to conversion), 9,000 units introduced, 8,000 units completed and 2,000 units closing WIP (40% complete as to conversion). Under the FIFO method, the equivalent units for conversion cost are:
Under FIFO the equivalent units for conversion cost are 8,200. This is 400 to finish the opening WIP, 7,000 units started and completed, and 800 for closing WIP. The 600 units of opening work done last period are excluded, unlike the weighted average method's 8,800.
- A7,800 units
- B8,200 unitsCorrect
- C8,600 units
- D8,800 units
Explanation
Under FIFO: opening WIP completion = 1,000 x 40% = 400; units started and completed = 8,000 - 1,000 = 7,000; closing WIP = 2,000 x 40% = 800. Total = 400 + 7,000 + 800 = 8,200. The figure of 8,800 is the weighted average result, which includes the 600 equivalent units of work done in the previous period.
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