Use the information below to answer the following questions:
The Adams Company uses a process costing system. During the current period, 1,600 units were started and 1,200 units were completed and transferred out. Ending units were 70% complete for materials and 35% complete for conversion costs. Direct materials costs added were $32,500 and conversion costs added were $31,400. There was no beginning WIP inventory and conversion costs are added evenly throughout the process.
-At the end of the period, what are the total equivalent units for conversion costs for the Adams Company?

Question

Quizplus · Accepted Answer

1,600 units were started and 1,200 units were completed and transferred out. Ending units were 70% complete for materials and 35% complete for conversion costs. Since conversion costs are added evenly throughout the process, the equivalent units for conversion costs are equal to the units completed and transferred out plus the equivalent units in ending WIP. The equivalent units in ending WIP are equal to the units in ending WIP multiplied by the percentage of completion for conversion costs. Therefore, the total equivalent units for conversion costs are 1,200 + (700 * 0.35) = 1,340.

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