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    Equivalent Units

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    Given information

    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.

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    Solution Summary

    The solution explains the calculation of equivalent units under the FIFO method.

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