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 inventory 1,500 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?
Answer:
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
