Guthrie Corporation The following information is available for Guthrie Corporation for the current year:
All materials are added at the start of production.
Refer to Guthrie Corporation. Using weighted average, what are equivalent units for conversion costs?

Question

Guthrie Corporation The following information is available for Guthrie Corporation for the current year:
 All materials are added at the start of production.
Refer to Guthrie Corporation. Using weighted average, what are equivalent units for conversion costs?

Quizplus · Accepted Answer

The weighted average method considers the units started and completed during the period, as well as the units in ending Work in Process (WIP) inventory. 
Conversion costs include direct labor and overhead expenses that were incurred to convert raw materials into finished goods. Using the weighted average method:
Equivalent Units for Conversion Costs = (Units completed and transferred out) + (Ending WIP inventory x Percentage complete)
Units completed and transferred out = 58,000
Ending WIP inventory = 24,000 
Conversion costs for ending WIP inventory = $32,400 (direct labor) + $20,160 (overhead) = $52,560
Percentage complete = 50% (provided in question)
Equivalent units for conversion costs = (58,000) + (24,000 x 0.5) = 78,000
Therefore, the answer is B (78,100 was rounded up to the nearest hundred).

Guthrie Corporation the Following Information Is Available for Guthrie Corporation