Question

The Chart Company has a process costing system. All materials are added when the process is first begun. At the beginning of September, there were no units of product in process. During September 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent units for the conversion costs in September were_______________.

a. 40,000.
b. 45,000.
c. 48,000.
d. 50,000

Answer 1

c) 48,000

Step-by-step explanation:

Equivalent Units

To apportion cost between work in progress and completed units in a particular period, we use equivalent units. Equivalents units are notional whole units which represent incomplete work and are used to apportion cost between completed units and work in progress

Equivalent Units = Degree of Completion × Units of products

Item units workings E.U

Finished products 45,000 100% × 45,000 = 45,000

Closing WIP 5000 3/5 × 5000 = 3,000

Total equivalent unit 48,000

Equivalent unit for the conversion cost= 45000 +3000= 48,000