Question

Carmelita Inc. has the following information available:

	Costs from Beginning Inventory	Costs from Current Period
Direct materials	$4,500	$25,500
Conversion costs	6,700	156,100

At the beginning of the period, there were 600 units in process that were 41% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 5,500 units were started and completed. Ending inventory contained 300 units that were 34% 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.5,956 for direct materials and 5,800 for conversion costs

b.5,956 for direct materials and 5,956 for conversion costs

c.5,800 for direct materials and 5,956 for conversion costs

d.5,500 for direct materials and 5,956 for conversion costs

Answer 1

Solution:

Answer : Option  c.5,800 for direct materials and 5,956 for conversion costs

Calculation:

	Equivalent Units
		Materials		Conversion Costs
Particulars	Units to be accounted for	% Completed	EUP - Materials	%	EUP - Conversion
Beginning Inventory	600		0	59%	354
Units Started and Completed	5500	100%	5500	100%	5500
Ending Inventory	300	100%	300	34%	102
Equivalent Units	6400		5800		5956

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