Salmon Manufacturing Company uses a process costing system. Direct materials are added at the beginning of the process. During January, Department Q had a beginning inventory of 2,000 units, 25% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 60% complete for conversion costs.
Using FIFO process costing, the equivalent units for direct materials for the month were:
A) 13,600
B) 14,000
C) 16,000
D) 15,600

Question

Quizplus · Accepted Answer

Since direct materials are added at the beginning of the process, the equivalent units for direct materials would be the total units started during the month, which is 14,000 units. The beginning inventory and the completion level of the ending inventory do not affect the calculation for direct materials in this scenario.

Salmon Manufacturing Company Uses a Process Costing System