Gorski ltd. began operations on January 1 of the current year. The company uses a process-costing system, and conversion costs are incurred evenly throughout the manufacturing process. By January 31, the firm had completed 56,000 units. Which of the following statements could be true about the ending work-in-process inventory if equivalent units for conversion cost totalled 59,000 units?

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated as completed units plus the equivalent units in ending inventory. With 56,000 completed units and 59,000 equivalent units, the ending inventory must account for 3,000 equivalent units. If the ending inventory is 10,000 units and 30% complete, it would contribute 3,000 equivalent units (10,000 x 30%).

Gorski Ltd