In the month of June, a department had 12,000 units in beginning work in process that were 70% complete. During June, 48,000 units were transferred into production from another department. At the end of June there were 6,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June were
A) 48,000 equivalent units.
B) 56,400 equivalent units.
C) 54,000 equivalent units.
D) 60,000 equivalent units.

Question

Quizplus · Accepted Answer

- For materials, we only consider the units in ending work in process that are complete (100%) and the units completed during the month. Therefore, the equivalent units for materials are:

Beginning WIP: 12,000 x 70% = 8,400 units
Units started and completed: 48,000 units
Ending WIP: 6,000 x 40% = 2,400 units
Equivalent units for materials = 8,400 + 48,000 + 2,400 = 58,800 units

- For conversion costs, we consider all units in beginning work in process, units started and completed during the month, and units in ending work in process (whether complete or not). Therefore, the equivalent units for conversion costs are:

Beginning WIP: 12,000 x 70% = 8,400 units
Units started and completed: 48,000 units
Ending WIP: 6,000 x 40% = 2,400 units
Equivalent units for conversion costs = 8,400 + 48,000 + 2,400 + 6,000 x 40% = 56,400 units

Therefore, the answer is B) 56,400 equivalent units.

In the Month of June, a Department Had 12,000 Units