Question

Conversion cost totals $600,000, of which $100,000 is for beginning inventory conversion cost. The remaining $500,000 of the conversion cost is incurred this period. Total equivalent production this period is 100,000 units, of which 10,000 is the equivalent production of beginning inventory units. Using FIFO, how much is the total conversion cost for beginning inventory

Answer 1

The total conversion cost for beginning inventory using the FIFO method is $100,000, which is allocated to the 10,000 equivalent units of beginning inventory.

Step-by-step explanation:

The student has asked about the calculation of the total conversion cost for beginning inventory using the FIFO (First-In, First-Out) costing method in a production or manufacturing setting. To calculate this, we need to recognize that under FIFO, costs from the beginning inventory are completely assigned to the beginning equivalent units before any additional costs incurred in the current period are considered.

Since we have a total beginning inventory conversion cost of $100,000 and 10,000 equivalent units of beginning inventory, the entire $100,000 would be allocated to those 10,000 equivalent units. The conversion cost for the remaining production this period would then be applied to the new units produced. Therefore, the total conversion cost for beginning inventory using FIFO is $100,000.