Winkle Corporation uses the FIFO method in its process costing system. Beginning inventory in the mixing processing center consisted of 5,000 units, 90% complete with respect to conversion costs. Ending work in process inventory consisted of 2,000 units, 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the period, how many would the equivalent units for conversion costs be

The equivalent units for conversion costs are 7,300

Explanation:

Winkle Corporation

FIFO Method

Particulars       Units        % of Completion           Equivalent Units

                                        Materials Conversion  Materials Conversion

Completed      10,000       100         100                10,000    10,000

Add Ending

WIP                   2000          100        90                 2000        1800

Less Beg.

WIP                 5000            100      90                  5000        4500

Total Equivalent Units                                           7000         7,300

In FIFO the equivalent units are always less than the equivalent units of the weighted average method.

The FIFO assigns costs to only the current period equivalent units.

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