Department R had 4,900 units in work in process that were 71% completed as to labor and overhead at the beginning of the period; 32,600 units of direct materials were added during the period; 35,500 units were completed during the period; and 2,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was ... ?

a) 37,721

b) 42,400

c) 32,821

d) 35,500

c) 32,821 units

Explanation:

As we can see, in this case there are three types of units in the period:

1) The units that left as work in process in the previous period and were finished in this one: 4,900 units at 71% were WIP (work in process) and the beggining of the period, so in this period, only 29% of them were procesed. In equivalent units = 4,900 * 0.29 = 1,421 units. Since we are working under FIFO's inventory method, those were the first units produced

2) The units that were completely produced in the period. We know that a total number of units completed is 35,500 but 4,900 of them were WIP from the previous period, so we have : 35,500 - 4,900 = 30,600 units completeley proceced during the actual period.

3) Finally, there are some remaining WIP: 2,000 units that were proceced at a 40%, so, in equivalent units for the period are: 2,000 units*0.4 = 800 Units

Total equivalent units = 1,421 + 30,600 + 800 = 32,821 Units