Question

Nader, Inc., has the following information available from prior month and the general ledgert: Costs in Beginning WIP Costs added Current PeriodDirect materials $2,300 $ 21,252Conversion costs 6,200 150,536Total beginning WIP $8,500At the beginning of the period, there were 500 units in process that were 40 percent complete as to conversion costs. During the current period, 4,300 units were started and completed. Ending inventory contained 320 units that were 80 percent complete as to conversion costs. Direct materials are added at the beginning of the process. (Assume that the company uses the FIFO costing method.)The equivalent units of production for direct materials and conversion costs, respectively, were:______.A) 5,120 for direct materials and 5,056 for conversion costs.B) 4,480 for direct materials and 4,544 for conversion costs.C) 4,120 for direct materials and 4,056 for conversion costs.D) 4,620 for direct materials and 4,856 for conversion costs.

Answer 1

Answer:

D) 4,620 for direct materials and 4,856 for conversion costs.

Explanation:

Equivalent Units of Production Calculation ;

Direct Materials

To finish opening Work In Process (320 × 0%)                  =      0

Started and Completed                                                       =  4,300

Closing Work In Process (320 × 100%)                               =     320

Total Equivalent units of production for direct materials  =  4,620

Conversion Costs

To finish opening Work In Process (320 × 60%)                =    192

Started and Completed                                                       = 4,300

Closing Work In Process (320 × 80%)                                =     256

Total Equivalent units of production for direct materials  =  4,748

Conclusion :

The closest option is D : 4,620 for direct materials and 4,856 for conversion costs.