The following information is provided by Adametz Company: The units in ending WIP Inventory were 90% complete for materials and 85% complete for conversion costs.
At the end of the year, what are the equivalent units for conversion costs?
A)6120
B)3000
C)6570
D)3570

Question

The following information is provided by Adametz Company:  The units in ending WIP Inventory were 90% complete for materials and 85% complete for conversion costs.
At the end of the year, what are the equivalent units for conversion costs?
A)6120 
B)3000 
C)6570 
D)3570

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated as follows: 
Units in ending WIP Inventory x Percentage of completion for conversion costs. 
Therefore, equivalent units for conversion costs = 1,500 x 85% = 1,275 
Additionally, the equivalent units of production for the year are calculated as follows: 
Units completed and transferred out + Units in ending WIP Inventory x Percentage of completion for materials 
Equivalent units of production = 24,000 + (1,500 x 90%) = 25,350 
Therefore, the best choice is C, 6570, since it is the equivalent units for conversion costs.

The Following Information Is Provided by Adametz Company: the Units