Humbert Inc., a factory that manufactures plastic ice cube trays, has opened a new department as of May 1 of this year. As of June 1, Humbert had 4,200 units that were 100% complete with respect to Direct Materials (DM) and 64% complete with respect to Conversion Costs (CC). During the year, Humbert started and completed 76,420 units. On June 30, they had 9,870 units remaining in inventory that were 100% complete with respect to Direct Materials and 42% complete with respect to Conversion Costs. What are the equivalent units of production for Direct Materials and Conversion Costs using the First-In, First-Out (FIFO) method? (Round to the nearest unit)

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Quizplus · Accepted Answer

This question requires familiarity with calculating equivalent units for two different costs while also taking FIFO into account, so that means that beginning inventory will need to factor in. For the Direct Materials, add the following: (4,200 × 0%) + 76,420 + (9,870 × 100%) = 86,290 units. For Conversion Costs, add the following: (4,200 × 36%) + 76,420 + (9,870 × 42%) = 1,512 + 76,420 + 4,145 = 82,077 units.