Equivalent Units of Direct Materials Calculation

What are the total equivalent units of Direct Materials under the First-In, First-Out (FIFO) method and the Weighted-Average method?

A. 7050 for FIFO and 9900 for Weighted-Average

B. 7650 for FIFO and 9900 for Weighted-Average

C. 9900 for FIFO and 7650 for Weighted-Average

D. 9900 for FIFO and 7050 for Weighted-Average

Final answer: The total equivalent units of Direct Materials for the FIFO method are 10500 units and for the Weighted-Average method are 9900 units.

The equivalent units for Direct Materials (DM) under both the First-In, First-Out (FIFO), and Weighted-Average methods can be attained by computing the units started and completed during the period plus the equivalent units in the ending Work-in-Progress (WIP) Inventory.

For the FIFO method, the equivalent units comprise new units started and completed during the period (7650 units) plus the equivalent units in the ending WIP Inventory that were worked upon during this period (2850 units times 100% completion for DM). This totals to 7650 + (2850 * 100%) = 7650 + 2850 = 10500 equivalent units.

For the weighted average method, the equivalent units comprise all units completed during the period (7050 units) plus all equivalent units in the ending WIP Inventory (2850 units times 100% completion). This totals to 7050 + (2850 * 100%) = 7050 + 2850 = 9900 equivalent units.

So, the correct answer to the student's question would be '10500 for FIFO and 9900 for Weighted-Average'.