A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 60,000 units were started into production in January; and there were 15,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January?
A) 45,000 equivalent units.
B) 54,000 equivalent units.
C) 51,000 equivalent units.
D) 60,000 equivalent units.

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated by adding the units completed and transferred out to the equivalent units in ending work in process. Here, 45,000 units were completed (60,000 started - 15,000 in ending inventory), and the 15,000 units in ending inventory are 40% complete, contributing 6,000 equivalent units (15,000 * 40%). Thus, the total equivalent units for conversion costs are 51,000 (45,000 + 6,000).

A Department Adds Raw Materials to a Process at the Beginning