Share
Explore BrainMass

Equivalent Units for Direct Materials and Conversion Costs

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 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