Ferrell Glass Company uses a process costing system. The company reported a beginning inventory of 18,000 units that were 40% complete with respect to direct materials. During the month, 90,000 units were started and ending inventory amounted to 12,000 units that were 100% complete with respect to direct materials. What were the equivalent units of production for direct materials?
A) 109,200
B) 108,000
C) 87,600
D) 92,400

Question

Quizplus · Accepted Answer

Equivalent units of production for direct materials = Units completed and transferred out + Equivalent units in ending inventory. Units completed = Beginning inventory + Units started - Ending inventory = 18,000 + 90,000 - 12,000 = 96,000. Ending inventory is 100% complete, so equivalent units = 12,000. Total equivalent units = 96,000 + 12,000 = 108,000.

Ferrell Glass Company Uses a Process Costing System