Richards Corporation uses the FIFO method of process costing.The following information is available for October in its Fabricating Department: Units:
Beginning Inventory: 80,000 units,60% complete as to materials and 20% complete as to conversion.
Units started and completed: 250,000.
Units completed and transferred out: 330,000.
Ending Inventory: 30,000 units,40% complete as to materials and 10% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $37,200.
Costs in beginning Work in Process - Conversion: $79,700.
Costs incurred in October - Direct Materials: $646,800.
Costs incurred in October - Conversion: $919,300.

-Calculate the equivalent units of materials.
A)250,000
B)317,000
C)294,000
D)333,000
E)342,000

Question

Richards Corporation uses the FIFO method of process costing.The following information is available for October in its Fabricating Department: Units:
Beginning Inventory: 80,000 units,60% complete as to materials and 20% complete as to conversion.
Units started and completed: 250,000.
Units completed and transferred out: 330,000.
Ending Inventory: 30,000 units,40% complete as to materials and 10% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $37,200.
Costs in beginning Work in Process - Conversion: $79,700.
Costs incurred in October - Direct Materials: $646,800.
Costs incurred in October - Conversion: $919,300.

-Calculate the equivalent units of materials.
A)250,000
B)317,000
C)294,000
D)333,000
E)342,000

Quizplus · Accepted Answer

Equivalent units for materials = Units started and completed + (Ending Inventory * % completion for materials) = 250,000 + (30,000 * 40%) = 250,000 + 12,000 = 262,000. However, since the FIFO method is used, we must not forget to add the completion of the beginning inventory: Beginning Inventory * (100% - % completion for materials at the start) = 80,000 * (100% - 60%) = 80,000 * 40% = 32,000. Therefore, the total equivalent units for materials = 262,000 + 32,000 = 294,000.

Richards Corporation Uses the FIFO Method of Process Costing