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
A) 5,340 for direct materials and 4,902 for conversion costs.
B) 4,840 for direct materials and 4,802 for conversion costs.
C) 4,602 for direct materials and 4,802 for conversion costs.
D) 4,902 for direct materials and 4,802 for conversion costs.

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
A) 5,340 for direct materials and 4,902 for conversion costs. 
B) 4,840 for direct materials and 4,802 for conversion costs. 
C) 4,602 for direct materials and 4,802 for conversion costs. 
D) 4,902 for direct materials and 4,802 for conversion costs.

Quizplus · Accepted Answer

To calculate the equivalent units of production, we need to take into consideration the units that are complete and those that are partially complete.

For direct materials, we have:

- Beginning inventory: 500 units * 100% = 500 units
- Started and completed: 4,500 units * 100% = 4,500 units
- Ending inventory: 340 units * 100% = 340 units

Equivalent units of production for direct materials = 500 + 4,500 + 340 = 5,340 units.

For conversion costs, we have:

- Beginning inventory: 500 units * 60% = 300 units
- Started and completed: 4,500 units * 100% = 4,500 units
- Ending inventory: 340 units * 30% = 102 units

Equivalent units of production for conversion costs = 300 + 4,500 + 102 = 4,902 units.

Therefore, the answer is B.