Pelosi Company manufactures chairs. The following information was given for the company:
$\begin{array}{lr}
\text { Units, beginning work in process } & 0 \
\text { Units started } & 20,000 \
\text { Units completed } & ?\
\text { Units, ending work in process } & 5,000 \
\text { Cost of direct materials } & \$ 440,000 \
\text { Cost of conversion } & \$ 64,000
\end{array}$

Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
-Refer to the figure.What are the equivalent units for materials and conversion,respectively?

Question

Pelosi Company manufactures chairs. The following information was given for the company:
$\begin{array}{lr}
\text { Units, beginning work in process } & 0 \
\text { Units started } & 20,000 \
\text { Units completed } & ?\
\text { Units, ending work in process } & 5,000 \
\text { Cost of direct materials } & \$ 440,000 \
\text { Cost of conversion } & \$ 64,000
\end{array}$

Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
-Refer to the figure.What are the equivalent units for materials and conversion,respectively?

Quizplus · Accepted Answer

Equivalent units for materials are calculated based on the units started and completed, plus the materials added to the units in the ending work in process. Since materials in the ending inventory were 100 percent complete, the equivalent units for materials are 20,000 (all units started were fully processed with materials). For conversion, the equivalent units are calculated based on the units completed plus the conversion efforts added to the units in the ending work in process. With 5,000 units in the ending work in process at 20 percent conversion, this adds 1,000 equivalent units (5,000 units * 20% = 1,000) to the 15,000 units completed, totaling 16,000 equivalent units for conversion.

Pelosi Company Manufactures Chairs Materials in the Ending Inventory Were 100 Percent Complete and the Company