Carmelita Inc., has the following information available: At the beginning of the period, there were 500 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the period 4,500 units were started and completed. Ending inventory contained 340 units that were 30 percent complete as to conversion costs and 100 percent complete as to materials costs. (Assume that the company uses the FIFO process cost method.)
The equivalent units of production for direct materials and conversion costs, respectively, were

Question

Carmelita Inc., has the following information available:  At the beginning of the period, there were 500 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the period 4,500 units were started and completed. Ending inventory contained 340 units that were 30 percent complete as to conversion costs and 100 percent complete as to materials costs. (Assume that the company uses the FIFO process cost method.)
The equivalent units of production for direct materials and conversion costs, respectively, were

Quizplus · Accepted Answer

To calculate the equivalent units of production, we need to consider the units that are completed during the period and the units that are in the ending work in process inventory.

For direct materials:
Equivalent units of production = Units completed + (Ending inventory * Percentage complete)
Equivalent units of production = 4,500 + (340 * 100%)
Equivalent units of production = 4,840

For conversion costs:
Equivalent units of production = Units completed + (Ending inventory * Percentage complete)
Equivalent units of production = (4,500 + 340) * 60%
Equivalent units of production = 4,802

Therefore, the equivalent units of production for direct materials and conversion costs, respectively, were 4,840 and 4,802. The best choice is B.