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16 February, 11:13

Kalyan Corporation uses the FIFO method in its process costing system. Operating data for the Enameling Department for the month of May appear below: Units Percent Complete with Respect to Conversion Beginning work in process inventory 1,800 20 % Transferred in from the prior department during May 64,000 Ending work in process inventory 7,200 70 % What were the equivalent units of production for conversion costs in the Enameling Department for May

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  1. 16 February, 12:02
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    The equivalent units of production for conversion costs in the Enameling Department for May is 63,640 units

    Explanation:

    Concept of Equivalent Units looks at the units completed in terms of the inputs introduced in the process.

    Calculation of equivalent units of production for conversion costs:

    STEP 1 : Calculate the Units Completed and Transfered to finished Goods

    This is done by making sure that the number of units Entering the Process is equal to number of units leaving the process:

    Therefore Units Completed and Transfered to finished Goods = 1800+64000-7200=58600

    STEP 2 : Calculation of equivalent units of production for conversion costs

    Looking at our Output:

    Ending work in process inventory 7,200 at 70% complete for conversion costs = 5040 equivalent units

    Completed and Transfered 58600 at 100% complete for conversion costs = 58600 equivalent units

    Therefore total equivalent units is 58600 + 5040 = 63640
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