Final answer:
The equivalent units for conversion costs using the FIFO method for Chandler and Garrett Company is 25,200. This figure accounts for the units transferred out during the period and the work completed on the ending inventory, excluding the beginning work in process since it's already accounted for in the previous period. Option A is correct answer.
Step-by-step explanation:
The student's question involves calculating equivalent units for conversion costs using the FIFO (First-In, First-Out) method. To solve this, we need to account for work completed during the current period on units from beginning inventory and on units introduced during the period. Under the FIFO method, the beginning inventory's remaining work and the work on units started and completed in the current period, plus the work done on the ending inventory, are considered.
Here's the step-by-step calculation:
- Calculate the equivalent units for the beginning work in process (WIP). Given that the beginning WIP was 3,000 units and 30% complete, the remaining 70% conversion work needs to be done. However, since FIFO only looks at work done in the current period, we ignore these since they were completed in a prior period under FIFO assumptions.
- Add the units transferred out. As they are fully complete when transferred out, this will simply be 25,000 units.
- Calculate the equivalent units for ending inventory, which is 1,000 units at 20% completion. This means that 20% of conversion work was done in the current period, so 1,000 units x 20% = 200 equivalent units for conversion costs.
- Add the results of steps 1, 2, and 3 to get the total equivalent units for conversion costs. 0 (from beginning WIP under FIFO) + 25,000 (from transferred out units) + 200 (from ending WIP) = 25,200 equivalent units for conversion costs.
Hence, the answer to the student's question is option a. 25,200.