A company began its operations by starting 40,000 units in production. During the month, 22,000 were completed and transferred out while the remaining units were 45% complete. How many equivalent units of production were there with respect to conversion costs?
A) 22,000 units
B) 30,100 units
C) 30,000 units
D) 25,600 units

Question

Quizplus · Accepted Answer

The equivalent units of production with respect to conversion costs are calculated by adding the units completed and transferred out (22,000 units) to the equivalent units for the remaining work in process. The remaining units in process are 18,000 (40,000 started - 22,000 completed = 18,000). Since these are 45% complete, their equivalent units are 18,000 * 0.45 = 8,100. Adding these together gives 22,000 + 8,100 = 30,100 equivalent units.

A Company Began Its Operations by Starting 40,000 Units in Production