Pushkin Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. What are the equivalent units for materials for the month in the first processing department?
A)400
B)8,700
C)8,140
D)7,700

Question

Pushkin Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:  Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. What are the equivalent units for materials for the month in the first processing department?
A)400 
B)8,700 
C)8,140 
D)7,700

Quizplus · Accepted Answer

The equivalent units for materials are calculated as follows:

Units started in production during the month = 5,500
Units already in process at the beginning of the month = 1,200
Total units accounted for = 6,700

Equivalent units for materials = (Units completed and transferred out) + (Equivalent units in ending work in process)
Units completed and transferred out = 5,000
Equivalent units in ending work in process = (90% x 500) + (30% x 200) = 450 + 60 = 510

Equivalent units for materials = 5,000 + 510 = 8,140

Therefore, the best choice is C, 8,140.

Pushkin Corporation Uses the FIFO Method in Its Process Costing