Gatlin Manufacturing adds direct materials at the beginning of the production process,while conversion costs are incurred uniformly throughout the process.At the end of the period,equivalent units for direct materials were 250 more than equivalent units for conversion costs.1,000 units were started during the period,and 1,000 units were also completed.Ending Work in Process Inventory was 50% complete.How many physical units were in ending Work in Process Inventory?
A)250
B)500
C)750
D)1,000

Question

Quizplus · Accepted Answer

Since equivalent units for direct materials were 250 more than equivalent units for conversion costs, it means that there were 250 units that were completed for conversion costs but not yet completed for direct materials. Therefore, the total equivalent units for conversion costs is 1,000 (completed units) + 250 (in ending WIP at 50% completion) = 1,250. Since conversion costs are incurred uniformly throughout the process, we can divide the equivalent units for conversion costs by the number of physical units started during the period to get the equivalent units per physical unit: 1,250 / 1,000 = 1.25. We can then use this to find the physical units in ending WIP for conversion costs: 250 / 1.25 = 200. Since ending WIP was 50% complete, we can double this to get the total physical units in ending WIP: 200 x 2 = 400. Therefore, the best choice is B) 500.

Gatlin Manufacturing Adds Direct Materials at the Beginning of the Production