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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

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    https://brainmass.com/business/fifo/equivalent-units-for-direct-materials-and-conversion-costs-273817

    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, ...

    Solution Summary

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

    $2.19

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