Moulgadi 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) 1,040
B) 9,385
C) 10,400
D) 8,100

Question

Moulgadi 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) 1,040 
B) 9,385 
C) 10,400 
D) 8,100

Quizplus · Accepted Answer

Equivalent units for materials are the number of units that would have been produced if all of the units in the beginning work in process inventory and the units started during the period had been completed to the same extent as the units completed and transferred out of the department during the period.In this case, the equivalent units for materials are 9,385. This is calculated as follows:Beginning work in process inventory: 1,000 units x 100% complete = 1,000 equivalent unitsUnits started during the period: 9,000 units x 100% complete = 9,000 equivalent unitsTotal equivalent units: 1,000 + 9,000 = 10,000 equivalent unitsLess: Ending work in process inventory: 615 units x 85% complete = 523 equivalent unitsEquivalent units for materials: 10,000 - 523 = 9,385 equivalent units

Moulgadi Corporation Uses the FIFO Method in Its Process Costing