Perfect Pigments has 2900 gallons of paint in WIP Inventory, with 72% of materials already added. The paint is 40% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?
A)0
B)928
C)2088
D)1160

Question

Quizplus · Accepted Answer

Equivalent units for conversion costs can only be calculated for units that have begun the production process. Since the paint is 40% through the process, we can only calculate conversion costs for 40% of the WIP Inventory. 
Equivalent units for conversion costs = (40% of 2900 gallons) * 100% = 1160. Therefore, the answer is D.

Perfect Pigments Has 2900 Gallons of Paint in WIP Inventory