All materials are issued at the beginning of the process and conversion costs are incurred uniformly throughout the process. The ending work in process units are 40% complete as to conversion costs. What are the equivalent units of production for materials?

Incomplete Question.

The units for a period were:

Beginning work in process inventory 1,000 units

Units started this period 5,000 units

Ending work in process inventory1,500 units

Ending work in process inventory was 1/3 complete as to conversion costs.

All materials are issued at the beginning of the process and conversion costs are incurred uniformly throughout the process. The ending work in process units are 40% complete as to conversion costs. What are the equivalent units of production for materials?

The Total Equivalent Unit

For Material = 5,000 units

Explanation:

The question asks that we calculate the equivalent unit of production of materials. So, we have little or nothing to do with conversion costs.

First, we calculate the Physical Flow of Units;

Given that

Unit Begin WIP = 1,000

Unit Started This Period = 5,000

Total = 6,000

Representing Work In Process with WIP

The Physical Flow of Units is calculated as follows;

Units Completed and Transferred = 0

Unit from Beginning WIP = 1,000

Unit Started and Completed = Unit Started this Period - Ending WIP = 5,000 - 1,500 = 3,500

Total Unit Completed and Transferred = Unit in Beginning WIP + Units Started and Completed = 1,000 + 3,500 = 4,500

Unit Ending WIP = 1,500

Total = Total Unit Completed and Transferred out + Unit Ending WIP = 4,500 + 1,500

Total = 6,000

Now that we've gotten the physical flow of units, the next is to calculate the Ending Unit of Production

Before we proceed, take note of the following;

For Materials:

Beginning WIP is fully complete = 100%. None (0%) is needed to complete materials

Units started and completed = 100%

Ending WIP = 100%

Calculating Ending Unit of Production

For Material Costs;

Units from beginning WIP = 0

This is calculated by [ 1,000 units x (100% – 100% complete)]

Units Started and Completed = 3,500

This is calculated by (3,500 units x 100% complete)

Units in Ending WIP = 1,500

This is calculated by (1,500 units x 100% complete)

Total Equivalent Unit = 0 + 3,500 + 1,500

Total Equivalent Unit = 5,000

So, The Total Equivalent Unit For Material = 5,000 units

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