Answer:
Equivalent unit= 14380
Step-by-step explanation:
Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:
On July 1:
Beginning inventories 850 units, 60% complete
Direct materials cost $5,000
Conversion costs $4,000
During July:
Number of units started 15,000
Direct materials added $155,000
Conversion costs added $83,520
On July 31:
Ending inventories 1,600 units, 40% complete
Using the FIFO method, the number of equivalent units of conversion costs was
a. 15,850
b. 14,550
c. 14,380
d. 14,400
Number of Equivalent Unit for conversion = Beginning Inventory + Inventory Within + Ending Inventory
Beginning Inventory = 850 * (1-60%)
= 850 * (100% - 60%)
= 850 * 40%
= 850 * 0.4
= 340
Inventory Within = 15000 - 1600 = 13400
Ending Inventory = 1600 * (40%)
= 1600 * 40%
= 1600 * 0.4
= 640
Number of Equivalent Unit= 340+13400+640
= 14380
