The Made Rite Shoe Corporation uses a process costing system. In the Cutting Department, 4,000 units were started and by the end of the period, all but 400 units had been completed. The 400 units were 80% complete regarding materials and 40% complete regarding conversion costs. Costs added during the current period include $66,640 for materials and $70,312 for conversion. What was the number ofequivalent units of production for direct materials?
A) 3,540
B) 3,900
C) 3,760
D) 3,920

Question

Quizplus · Accepted Answer

3,920To calculate the equivalent units of production for direct materials, we add the number of units completed to the equivalent units for the unfinished inventory. Here, 4,000 units were started, and 3,600 units (4,000 - 400) were completed. For the 400 units that were not completed, they were 80% complete regarding materials. So, the equivalent units for materials in the unfinished inventory are 400 units * 80% = 320 units. Therefore, the total equivalent units for materials are 3,600 units (completed) + 320 units (unfinished) = 3,920 units.

The Made Rite Shoe Corporation Uses a Process Costing System