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San Jose Inc. uses the FIFO method for its process costing system. For this problem, work with the second department/process in a production chain. Transferred-in

San Jose Inc. uses the FIFO method for its process costing system. For this problem, work with the second department/process in a production chain. Transferred-in material is added at the beginning of the process, but direct materials are added when units are 40% complete with respect to conversion costs. Conversion costs are incurred evenly throughout production. The company started 120,000 units during May and had the following WIP inventory at the beginning and end of the month.

May 1, 15,000 units, 25% complete with respect to conversion costs

May 31, 12,000 units, 50% complete with respect to conversion costs

Total equivalent units for May are (i.e. direct materials, conversion costs, and transferred-in costs):

a. Direct Materials: 117,000; Conversion Costs: 122,250; Transferred-in costs: 117,000

b. Direct Materials: 135,000; Conversion Costs: 125,250; Transferred-in costs: 120,000

c. Direct Materials: 132,000; Conversion Costs: 122,250; Transferred-in costs: 135,000

d. Direct Materials: 120,000; Conversion Costs: 125,250; Transferred-in costs: 120,000

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