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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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#### 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

## 4 managerial accounting questions

Chocolate Candies Company produces chocolate candy in large quantities. They have two departments, a Mixing department and a Packaging department. The manufacturing costs in the Mixing department during December were:

Direct Materials Added \$200,000
Conversion Costs
Direct Labor \$100,000
Factory Overhead \$80,000 \$180,000
Total Mixing Dept. Costs to Account For \$380,000

Assume there was no beginning inventory in work in process. Also assume that 25,000 chocolates were started in the Mixing department during December. However, only 20,000 chocolates were started and fully completed and transferred to the Packaging department. The 5,000 units remaining in the Mixing department at the end of December were 100% complete with respect to Direct Materials, but only 25% complete with respect to conversion costs.

1. Compute the equivalent units for direct materials and conversion costs for December.

2. Compute the unit costs for direct materials and conversion costs.

3. Compute the cost of units completed for December.

4. Compute the cost of units in ending work in process for December

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