Galos Corporation Uses the FIFO Method in Its Process Costing

question 31

Multiple Choice

Galos Corporation uses the FIFO method in its process costing system.The Grinding Department started the month with 3,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs.An additional 82,000 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 11,000 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 for conversion costs in the Grinding Department for the month?

• A)74,000
• B)75,100
• C)90,000
• D)73,000

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Definitions:

Unused Capacity

The portion of a company's production potential that is not being utilized to manufacture goods or provide services.

Estimated Activity

An approximation of the amount of work or level of effort needed for a particular task or project.

Activity at Capacity

The level of operational activity that a company can achieve using its current resources without incurring additional costs.

Machine-Hours

A measure of the amount of time machines are used in the production process, often related to the allocation of manufacturing overhead.