A shampoo manufacturer offers the following information: The units in ending WIP inventory were 60% complete for materials and 40% complete for conversion costs.
On December 31, what are the total equivalent units for direct materials?

Question

A shampoo manufacturer offers the following information:  The units in ending WIP inventory were 60% complete for materials and 40% complete for conversion costs.
On December 31, what are the total equivalent units for direct materials?

Quizplus · Accepted Answer

The equivalent units for direct materials in ending WIP can be calculated using the percentage of completion of materials for the units in ending WIP inventory. 
Equivalent units for materials = Units in ending WIP inventory × Percentage of completion for materials
= 11ea68e5_ab7c_e61d_935e_317c198db2e9_TB2868_00 × 60%
= 6,984
The equivalent units for direct materials in completed units can be calculated as follows:
Equivalent units for materials = Units completed during the period × 100%
= 20,000 × 100%
= 20,000
Total equivalent units for direct materials = Equivalent units for materials in ending WIP + Equivalent units for materials in completed units
= 6,984 + 20,000
= 23,984
Therefore, the best answer choice is D (23,040).

A Shampoo Manufacturer Offers the Following Information: the Units