Using the FIFO method, the number of equivalent units for conversion costs was a. 14,380 b. 14,550 c. 15,850 d. 14,400

Equivalent unit = 14380

Step-by-step explanation:

Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:

On July 1:

Beginning inventories 850 units, 60% complete

Direct materials cost $5,000

Conversion costs $4,000

During July:

Number of units started 15,000

Direct materials added $155,000

Conversion costs added $83,520

On July 31:

Ending inventories 1,600 units, 40% complete

Using the FIFO method, the number of equivalent units of conversion costs was

a. 15,850

b. 14,550

c. 14,380

d. 14,400

Number of Equivalent Unit for conversion = Beginning Inventory + Inventory Within + Ending Inventory

Beginning Inventory = 850 * (1-60%)

= 850 * (100% - 60%)

= 850 * 40%

= 850 * 0.4

= 340

Inventory Within = 15000 - 1600 = 13400

Ending Inventory = 1600 * (40%)

= 1600 * 40%

= 1600 * 0.4

= 640

Number of Equivalent Unit = 340+13400+640

= 14380