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# Equivalent Units for Direct Materials and Conversion Costs

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Spunky Corporation uses a process costing system. All direct materials are added at the beginning of the process. Spunky's production quantity schedule for May is reproduced below:

Units
Work in Process on May 1 (conversion 60% complete)............... 1,000
Units started during production........................................................5,000
Total units to account for..................................................................6,000

Units completed and transferred out from beginning inventory...... 1,000
Units started and completed during May..........................................3,000
Work-in-process on May 30 (conversion 20% complete).................2,000
Total units accounted for.................................................................6,000

1. Using the FIFO method, the equivalent units for direct materials for May are:

A) 5,000 Units

B) 6,000 Units

C) 4,400 Units

D) 3,800 Units

2. Using the weighted-average method, the equivalent units for direct materials for May are:

A) 3,400 Units

B) 4,400 Units

C) 5,000 Units

D) 6,000 Units

3. Using the FIFO Method, the equivalent units for conversion costs for May are:

A) 3,400 Units

B) 3,800 Units

C) 4,000 Units

D) 4,400 Units

4. Using the weighted-average method, the equivalent units for conversion costs for May are:

A) 3,400 Units

B) 3,800 Units

C) 4,000 Units

D) 4,400 Units

##### Solution Summary

The solution explains how to calculate the equivalent units under FIFO method and weighted average method

##### Solution Preview

1. The equivalent units for material are
Units transferred from started and completed = 3,000 X 100% = 3,000 units
Units in ending WIP = 2,000 X 100% = 2,000 units
Total = 5,000 units
Since material is added at the beginning of the period, ...

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