Fulton Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent units for the year total:
A) materials, 70,000; conversion, 70,000.
B) materials, 70,000; conversion, 2,400.
C) materials, 72,400; conversion, 72,400.
D) materials, 82,000; conversion, 72,400.
E) materials, 82,000; conversion, 82,000.

Question

Quizplus · Accepted Answer

Materials are added at the beginning, so all units (completed and in process) are counted fully, totaling 82,000 (70,000 completed + 12,000 in process). Conversion costs are incurred evenly, so for the 12,000 units in process, only 20% are considered, adding 2,400 (20% of 12,000) to the 70,000 completed units for conversion, totaling 72,400.

Fulton Corporation Adds All Materials at the Beginning of Production