The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $$\begin{array} { | l cl| }
\hline & \text { Units } \
\text { Beginning work in process } & 26,000& \text { (70 percent complete for conversion costs) } \
\text { Units started } & 180,000 \
\text { Units transferred out } & 191,000 \
\text { Ending work in process } & 15,000 &\text { (60 percent complete for conversion costs) } \
\hline
\end{array}$$
Equivalent units for direct materials are

Question

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $$\begin{array} { | l cl| } 
\hline & \text { Units } \
\text { Beginning work in process } & 26,000& \text { (70 percent complete for conversion costs) } \
\text { Units started } & 180,000 \
\text { Units transferred out } & 191,000 \
\text { Ending work in process } & 15,000 &\text { (60 percent complete for conversion costs) } \
\hline
\end{array}$$ 
Equivalent units for direct materials are

Quizplus · Accepted Answer

Equivalent units for direct materials are equal to the units started plus the equivalent units in the beginning work in process. The equivalent units in the beginning work in process are equal to the units in the beginning work in process multiplied by the percentage of completion for direct materials. In this case, the beginning work in process is 70 percent complete for conversion costs, which means that it is also 70 percent complete for direct materials. Therefore, the equivalent units in the beginning work in process are 26,000 units * 70% = 18,200 units. The equivalent units for direct materials are therefore 180,000 units + 18,200 units = 198,200 units.

The Taylor Company Uses a Process Costing System Equivalent Units for Direct Materials Are A) 180,000

The Taylor Company Uses a Process Costing System Equivalent Units for Direct Materials Are
A) 180,000