Suppose that a company adds material at the beginning of production and that conversion costs are incurred evenly throughout production. In May, the beginning work in process inventory was 20% complete and the ending work in process inventory was 30% complete. Under the FIFO method, the number of equivalent units of production for direct materials for May is equal to the number of units
A) Started in May
B) Started and completed in May plus 30% times the number of units in ending inventory for May
C) Started and completed in May plus 20% times the number of units in beginning inventory plus 30% times the number of units in ending inventory for May
D) Started and completed in May plus 80% times the number of units in beginning inventory plus 30% times the number of units in ending inventory for May

Question

Quizplus · Accepted Answer

Under the FIFO method, for direct materials added at the beginning of production, the equivalent units of production are equal to the number of units started in May, as all materials are added at the start.

Suppose That a Company Adds Material at the Beginning of Production