Answer (A) is correct . The computation of equivalent units for a period using the FIFO method of process costing includes only the conversion costs and material added to the product in that period and excludes any work done in previous periods. Accordingly, FIFO equivalent units include work and material to complete BWIP, plus work and material to complete units started this period, minus work and material needed to complete EWIP. Given that all materials are added at the beginning of the process, only those units started during November would have received materials in that month. Because 5,000 units were started, the equivalent units for direct materials equal 5,000.
Answer (B) is incorrect because The total units to account for is 6,000.
Answer (C) is incorrect because The number of units completed and transferred out from BI plus units started and completed in November plus 20% of work-in-process on November 30 equals 4,400 (1,000 + 3,000 + 400).
Answer (D) is incorrect because The equivalent units for direct materials is not 3,800. Only those units started during November would have received materials in that month. Therefore, equivalent units for direct materials equal 5,000.
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Using the FIFO method, Levittown’s equivalent units for direct materials for November are
