Normand Corporation uses the first-in, first-out method in its process costing system. Data concerning the first processing department for the most recent month are listed below: What are the equivalent units for materials for the month in the first processing department?
A) 4,900
B) 1,200
C) 6,310
D) 7,100

Question

Normand Corporation uses the first-in, first-out method in its process costing system. Data concerning the first processing department for the most recent month are listed below:  What are the equivalent units for materials for the month in the first processing department?
A) 4,900 
B) 1,200 
C) 6,310 
D) 7,100

Quizplus · Accepted Answer

The equivalent units for materials in the first processing department are calculated as follows:
Units started and completed = 6,200
Incomplete units at the end of the month = 1,100
Total equivalent units = Units started and completed + Incomplete units at the end of the month = 6,200 + 1,100 = 7,300
However, 990 units were 100% complete with respect to conversion but only 80% complete with respect to materials. Therefore, the equivalent units for materials are 7,300 x 80% = 6,310. So, the correct answer is C.

Normand Corporation Uses the First-In, First-Out Method in Its Process