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5 April, 19:39

In Department C, materials are added at the beginning of the process. There were 1,000 units in beginning inventory, 10,000 units were started during the month, and 7,000 units were completed and transferred to finished goods inventory. The ending inventory in Department C in June was 40% complete as to conversion costs. Under the average cost method, what are the equivalent units of production for materials and conversion?

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  1. 5 April, 19:47
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    equivalent units of production:

    materials = 11,000

    conversion = 8,600

    Explanation:

    Step 1 Determine the units of Closing Work In Process Inventory

    Units in Closing Work In Process Inventory = Opening Work In Process Inventory + Units Started During the Month - Units completed and transferred to finished goods

    = 1,000+10,000-7,000

    = 4,000

    Step 2 Determine Total Equivalent Units for Materials and Conversion Costs

    Materials

    Note : materials are added at the beginning of the process

    Units completed and transferred to finished goods (100%) = 7,000

    Units in Closing Work In Process Inventory (100%) = 4,000

    Total = 11,000

    Conversion

    Units completed and transferred to finished goods (100%) = 7,000

    Units in Closing Work In Process Inventory (40%) = 1,600

    Total = 8,600
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