The following information is provided by Greenbay Company: The units were 80% complete for materials and 30% complete for conversion costs.
How much are the total costs for which Greenbay has to account (i.e., its total costs to account for)?

Question

The following information is provided by Greenbay Company:  The units were 80% complete for materials and 30% complete for conversion costs.
How much are the total costs for which Greenbay has to account (i.e., its total costs to account for)?

Quizplus · Accepted Answer

To calculate the total costs for which Greenbay has to account (i.e., its total costs to account for), we need to use the concept of equivalent units. Equivalent units are calculated based on the percentage completion of materials and conversion costs for each unit.

Total equivalent units for materials = Units x % completion = 11,000 x 80% = 8,800
Total equivalent units for conversion costs = Units x % completion = 11,000 x 30% = 3,300

Total equivalent units = Total equivalent units for materials + Total equivalent units for conversion costs 
= 8,800 + 3,300 
= 12,100

Total costs to account for = (Cost per equivalent unit for materials x Total equivalent units for materials) + (Cost per equivalent unit for conversion costs x Total equivalent units for conversion costs)

Cost per equivalent unit for materials = Total material costs / Total equivalent units for materials 
= $22,000 / 8,800 
= $2.50 per equivalent unit for materials

Cost per equivalent unit for conversion costs = Total conversion costs / Total equivalent units for conversion costs 
= $11,000 / 3,300
= $3.33 per equivalent unit for conversion costs

Total costs to account for = ($2.50 x 8,800) + ($3.33 x 3,300) 
= $22,000 + $10,989
= $32,989

Therefore, the correct answer is B.

The Following Information Is Provided by Greenbay Company: the Units