Question

The following information is provided by Adametz​ Company: WIP​ Inventory, January 1 0 units Units started 7 comma 600 Units completed and transferred out 3 comma 300 WIP​ Inventory, December 31 4 comma 300 Direct materials ​$15,500 Direct labor ​$18,400 Manufacturing Overhead ​$9,000 The units in ending WIP Inventory were​ 90% complete for materials and 84​% complete for conversion costs. At the end of the​ year, what are the equivalent units for conversion​ costs?

Answer 1

The equivalent units for conversion​ costs= 6,912 units

Step-by-step explanation:

The weighted average method of valuation would be used to determine the the equivalent units for conversion​ costs

Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.

Equivalent unit = Degree of completion × Units of inventory

Items units Equivalent unit

Completed unit 3,300 3,300× 100 = 3.300

Closing work in progress 4,300 4,300× 84%= 3,612

Total equivalent units 6,912

The equivalent units for conversion​ costs= 6,912 units