Question

Equivalent units for the molding department totaled 18,600 during January for conversion costs. Fifteen thousand units were transferred out to the finishing department. If the items remaining in ending inventory are 40% complete as to conversion costs and 80% complete as to materials, how many physical units are in ending inventory?

Answer 1

9,000 units

Step-by-step explanation:

The 15,000 units transferred to the finishing department were 100% complete with respect to material and conversion cost. The balance 18,600 - 15,000 = 3,600 equivalent units are there at the ending inventory with respect to conversion cost. The ending inventory is 40% complete with respect to conversion cost. These equivalent units have been calculated as below:

=> Physical units in ending inventory * Degree of completion with respect to conversion cost = Equivalent units

Physical units * 40% = 3,600

Physical units = 3,600 / 40%

Physical units = 9,000 units

So, the Physical units in ending inventory is 9,000 units