Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, the equivalent units of material were
A) 1,200
B) 1,100
C) 850
D) 1,450

Question

Quizplus · Accepted Answer

Under the FIFO method, equivalent units for materials are calculated based on the units started and completed during the period plus the ending work in process. Since direct materials are added at the beginning, all units transferred in are considered equivalent units for materials. Therefore, the equivalent units of material are 1,200.

Zuniga Ltd Uses a Process Costing System