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Asked by Jaylin Johnson on Apr 26, 2024

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Calculate the equivalent units of materials.

A) 165,000
B) 144,000
C) 140,000
D) 130,250
E) 110,000

FIFO Method

"First-In, First-Out," an inventory valuation approach where the first items acquired are the first ones sold, affecting the cost of goods sold and inventory valuation.

Process Costing

An accounting method used to calculate the cost of a process, or series of processes, through which a product moves, assigning average costs to each product unit.

Equivalent Units

A term used in cost accounting to express the amount of production output in terms of fully completed units of output.

  • Calculate equivalent units of production for both materials and conversion costs.
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Hriday PatelMay 02, 2024
Final Answer :
C
Explanation :
Equivalent units of materials = Units completed and transferred out + Ending inventory in units x Percentage complete as to materials = 135,000 + 30,000 x 100% = 165,000 units. However, since we are using FIFO, the ending inventory consists of units started in February, which means they are not included in the equivalent units calculation. Therefore, we only consider the beginning inventory and the units started and completed in February: Equivalent units of materials = Beginning inventory in units x Percentage complete as to materials + Units started and completed x Percentage complete as to materials = 25,000 x 100% + 110,000 x 100% = 140,000 units. Therefore, the correct choice is C.

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