18-23 FIFO method, spoilage, equivalent units. Refer to the information in Exercise 18-21. Suppose Gray Manufacturing Company uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equivalent units for direct materials and conversion costs. Show physical units in the rst column of your schedule. SOLUTION (15 min.) FIFO method, spoilage, equivalent units. Solution Exhibit 18-23 calculates equivalent units of work done in the current period for direct materials and conversion costs