Carmelita Inc., has the following information available:Costs from Beginning Inventory Costs from current ---------------------------------------PeriodDirect materials 2,000 $ 22,252Conversion costs 6,200 150,536At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.The equivalent units of production for direct materials and conversion costs, respectively, were

FIFO method is based on the concept that is first in first out. That is opening inventory is first completed then the units newly added and then the closing.

Opening inventory of work in process is 100 % complete for materials.

Closing inventory is also 100 % complete to materials thus,

Equivalent units of production for material in current period = Newly added + Closing

= 4,500 units + 340 units = 4,840 units

For conversion cost,

opening goods = 500 which are 60 % already converted so 40 % completed during the period = 500 [tex]\times[/tex] 40% = 200 units

4,500 units started and completed

Closing inventory = 340 which is 30 % complete = 340 [tex]\times[/tex] = 102 units.

Total equivalent units for conversion cost = 200 + 4,500 + 102 = 4,802 units

Equivalent units:

Material = 4,840 units

Conversion cost = 4,802 units