Use the information below to answer the following questions:
The following information is provided by Abbott Corporation:

The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs.
-At the end of the year, what are the equivalent units for conversion costs for the Abbott Corporation if all manufacturing costs are added during the process?

Question

Use the information below to answer the following questions:
The following information is provided by Abbott Corporation:
  
The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs.
-At the end of the year, what are the equivalent units for conversion costs for the Abbott Corporation if all manufacturing costs are added during the process?

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated based on the units that are completed and the units that are partially complete in the ending WIP inventory. In this case, the units in the ending WIP inventory are 40% complete for conversion costs. Therefore, 80 units in ending WIP inventory are equivalent to 32 units (80 x 0.4) for conversion costs. The total equivalent units for conversion costs would be the sum of the equivalent units for completed units and ending WIP inventory, which is 9,600 (8,000 + 1,600).

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