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12 November, 12:30

Gaba Corporation uses the FIFO method in its process costing system. The Grinding Department started the month with 17,400 units in its beginning work in process inventory that were 60% complete with respect to conversion costs. An additional 64,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 74,000 units were completed in the Grinding Department and transferred to the next processing department. There were 7,400 units in the ending work in process inventory of the Grinding Department that were 10% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Grinding Department for the month?

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  1. 12 November, 12:35
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    64,300 units

    Explanation:

    The computation of the equivalent units for conversion costs equal to

    = Beginning work in process inventory units * remaining percentage + units started and completed * percentage of completion + ending work in process inventory units * percentage of completion

    = 17,400 units * 40% + 56,600 units * 100% + 7,400 units * 10%

    = 6,960 units + 56,600 units + 740 units

    = 64,300 units

    We know that,

    Ending work in progress inventory = Additional units - units completed

    7,400 units = 64,000 units - units completed

    So, the units completed would be

    = 64,000 units - 7,400 units

    = 56,600 units
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