Physical Units Direct Conversion
(Pennants) Materials Costs
Work in process, Nov. 1* 1,000 $1,423 $1,110
Started in Nov. 2003 ?
Good units completed and transferrred out
during November 2003 9,000
Normal spoilage 100
Abnormal spoilage 50
Work in process, November 30** 2,000
Costs added during November 2003 $12,180 $27,750
*Degree of completion: direct materials, 100%; conversion costs, 50%
**Degree of completion: direct materials, 100%; conversion costs, 30%
Suppose Gray Manufacturing COmpany uses the FIFO method of process costing instead of the weighted-average method. Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.
The solution explains the calculation of equivalent units under the FIFO method.