Ending WIP inventory has 100 units that are 80% complete for direct materials and 30% complete for conversion costs.For calculating costs per equivalent unit,which of the following statements is true?

Question

Quizplus · Accepted Answer

The denominator for calculating costs per equivalent unit includes the total number of units being accounted for in the calculation. In this case, the 100 units in WIP inventory should be included. However, since the units are only partially complete for direct materials and conversion costs, only the equivalent units for each should be included in the denominator. Since the WIP inventory has 80% complete units for direct materials and 30% complete units for conversion costs, these are the proportions that should be used to calculate the equivalent units. Therefore, the denominator would include 80 units for direct materials (80% of 100) and 30 units for conversion costs (30% of 100).

Ending WIP Inventory Has 100 Units That Are 80% Complete