Question

Carmelita Inc., has the following information available:

	Costs from Beginning Inventory	Costs from current Period
Direct materials	2,000	$ 22,252
Conversion costs	6,200	150,536

At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.
The equivalent units of production for direct materials and conversion costs, respectively, were

a.4,840 for direct materials and 4,802 for conversion costs

b.5,340 for direct materials and 4,902 for conversion costs

c.4,602 for direct materials and 4,802 for conversion costs

d.4,902 for direct materials and 4,802 for conversion costs

Answer 1

a.4,840 for direct materials and 4,802 for conversion costs

Explanation

	Direct Materials	Conversion costs
Units in beginning WIP (A)	500	500
% of completion of beginning WIP in previous period (B)	100%	60%
% of beginning WIP completed this period [C=100%-B]	0%	40%
Equivalent units in beginning WIP [D=A×C]	0	200
Units started and completed in current period	4,500	4,500
Units closing WIP (E)	340	340
% of completion of closing WIP (F)	100%	30%
Equivalent units in closing WIP (G=E×F)	340	102
Total equivalent units	4,840	4,802
	(0+4500+340)	(200+4500+102)