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Hollins Company uses the FIFO method to compute equivalent units. It has 2,000 units in beginning work in process, 20% complete as to conversion costs, 25,000 units started and completed, and 3,000 units in ending work in process, 30% complete as to conversion costs. All units are 100% complete as to materials. Equivalent units for materials and conversion costs are, respectively:_______.
a) 28,000 and 26,600.b) 28,000 and 27,500.c) 27,000 and 26,200.d) 27,000 and 29,600.

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Answer:

Hollins Company

Equivalent units for materials and conversion costs are, respectively:_______.

b) 28,000 and 27,500.

Explanation:

a) Data and Calculations:

                            Units     Materials     Conversion

Beginning WIP  2,000         0                  1,600 (2,000 * 80%)

Started and

completed     25,000       25,000       25,000 (100%)

Ending WIP       3,000         3,000             900 (3,000 * 30%)

Equivalent units                28,000        27,500

b) To calculate the equivalent units using the FIFO method involves determining the equivalent units of the following: Beginning Work-in-Process, Units Started and Completed, and Ending Work-in-Process with respect to work done during the current period.

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