In Order to Compute Equivalent Units of Production Using the FIFO

question 7

Multiple Choice

In order to compute equivalent units of production using the FIFO method of process costing, work for the period must be broken down to units:

• A) completed during the period and units in ending inventory.
• B) started during the period and units transferred out during the period.
• C) completed from beginning inventory, started and completed during the month, and units in ending inventory.
• D) processed during the period and units completed during the period.

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Definitions:

Prime Costs

Prime costs are the direct costs of manufacturing a product, consisting of direct labor and direct materials.

Conversion Costs

The aggregate of labor and overhead expenses incurred in converting raw materials into finished goods.

Manufacturing Costs

Expenses directly related to the production of goods, including the costs of raw materials, direct labor, and overhead.

Direct Cost

Expenses that can be directly attributed to the production of specific goods or services, such as materials and labor.