A freshly started company has given the following details for a particular process: There was no beginning Work-in-Progress (WIP) Inventory. A new batch of 1,000 units was introduced for processing at the beginning of the day. The company works 8 hours on a daily basis and a batch takes 6 hours of processing no matter how many units are introduced. In the first 6 hours, the entire 1,000 units were completed and removed from WIP Inventory to Finished Goods (FG) Inventory. 750 additional units were introduced upon completion. Conversion Costs (CC) evenly throughout the process. Find out the equivalent units for conversion costs in the ending WIP Inventory.
A) 250 units
B) 750 units
C) 1,000 units
D) 5,000 units

Question

Quizplus · Accepted Answer

It required 6 hours to start and complete the processing of the first 1,000 units. With 2 hours left in the day, 750 new units were introduced for processing. That means 2 hours out of 6 hours of work, so there was enough time left in the day to complete 1/3 of the process work. Equivalent units for conversion are therefore 750 units × one-third = 250 units.

A Freshly Started Company Has Given the Following Details for a Particular