Answer the following questions using the information below:
The Lebanon Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Lebanon Tractor uses weighted-average costing.

-What are the equivalent units for direct materials and conversion costs, respectively, for April?
A) 250 units; 125 units
B) 1,600 units; 1,475 units
C) 1,350 units; 1,350 units
D) 1,600 units; 1,600 units

Question

Answer the following questions using the information below:
The Lebanon Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Lebanon Tractor uses weighted-average costing.
 
-What are the equivalent units for direct materials and conversion costs, respectively, for April?
A) 250 units; 125 units 
B) 1,600 units; 1,475 units 
C) 1,350 units; 1,350 units 
D) 1,600 units; 1,600 units

Quizplus · Accepted Answer

Equivalent units for direct materials and conversion costs often differ because materials are typically added at the beginning of the production process, while labor and overhead (conversion costs) are incurred throughout the process. The correct answer, B) 1,600 units for direct materials and 1,475 units for conversion costs, suggests that all units were accounted for direct materials, but some units were partially completed in terms of conversion, leading to fewer equivalent units for conversion costs.

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