Question

During the month of May, Lucas Clothing transferred 140,000 shirts to Finished Goods Inventory. There was no beginning work-in-process inventory. The company had 40,000 shirts in process at May 31 and the shirts were 75 percent complete with respect to conversion costs. All direct materials are added at the beginning of the production process.

Required:
a. The equivalent units for conversion costs for May ____________.

Answer 1

180,000 Units

Step-by-step explanation:

The equivalent units for can be calculated using the following formula:

Equivalent units for Conversion Cost = Completed + (Ending work in process * Materials %age)

Here

Completed units of shirts are 140,000

Ending work in process is 40,000 Units

The percentage of input is 100% as all the direct materials are added at the beginning of the production process.

So by putting values, we have:

Equivalent units for Conversion Cost = 140,000 Units + 40,000 * 100%

= 180,000 Units