If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them. A. TRUEB. FALSE

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Business

Solomon Crosby

17 May, 22:14

If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them. A. TRUEB. FALSE

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Edwin Graves · Answer 1

B) False

Explanation:

The department had 50,000 units which were:

25% complete with respect to direct materials (equivalent to 12,500 units), to finish them it must add 37,500 equivalent units of direct materials. 40% complete with respect to conversion (equivalent to 20,000 units), to finish them it must add 30,000 equivalent units of direct labor.