The information below was obtained from the records of one of the departments of Cushing Corporation for the month of August. The company uses the first-in, first-out method in its process costing system. All materials are added at the beginning of the process.The equivalent units for materials for the month of August are:
A) 88,000 units
B) 96,700 units
C) 101,800 units
D) 109,300 units

Question

The information below was obtained from the records of one of the departments of Cushing Corporation for the month of August. The company uses the first-in, first-out method in its process costing system.  All materials are added at the beginning of the process.The equivalent units for materials for the month of August are:
A) 88,000 units 
B) 96,700 units 
C) 101,800 units 
D) 109,300 units

Quizplus · Accepted Answer

The equivalent units for materials are calculated as follows:
Beginning WIP inventory: 10,000 units x 100% = 10,000 units
Units started and completed in August: 75,000 units x 100% = 75,000 units
Ending WIP inventory: 25,000 units x 40% = 10,000 units
Total equivalent units for materials: 10,000 units + 75,000 units + 10,000 units = 96,700 units. Therefore, the best choice is B.

The Information Below Was Obtained from the Records of One