Question

At the start of the month, Lunar Industries' Mixing Department had no beginning work in progress inventory. Over the course of the

month, the department completed and transferred out 48,000 units, and at the end of the month, it had 12,000 units in ending work in
process inventory that were 75% complete with respect to conversion and 90% complete with respect to materials. If there were
57,000 equivalent units of production for conversion costs for the month, this indicates that
conversion costs are incurred uniformly throughout the process.
O all materials costs are incurred at the beginning of the process.
all materials costs are incurred at the end of the process.
O materials costs are incurred uniformly throughout the process.

Answer 1

57,000 conversion equivalent units suggest even cost spread. Only 75% conversion on ending units, but total work equals 60,000 units started. Even spread needed to reach overall conversion level! So, answer is conversion costs occur uniformly.

Based on the information provided in the image and explanation, the correct answer is:

Conversion costs are incurred uniformly throughout the process.

Here's why:

Equivalent units of production for conversion costs (57,000) represent the total conversion work done during the month, equivalent to producing 57,000 fully completed units in terms of conversion costs.

Ending work-in-process units (12,000) are 75% complete with respect to conversion, meaning only 75% (9,000 units) have undergone full conversion.

Total units transferred out (48,000) + ending work-in-process units (12,000) = Units started (60,000).

Since the 57,000 equivalent units represent all the conversion work done on the 60,000 units started, and 9,000 units in ending inventory haven't undergone full conversion, the conversion costs must be incurred evenly throughout the process.

Therefore, options A and D are incorrect because they assume all or none of the conversion costs occur at the beginning or end of the process. Option B is also incorrect because it doesn't align with the information about ending work-in-process completeness.