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Gutierrez, which uses a process-costing system, adds all material at the beginning of production and incurs...

Gutierrez, which uses a process-costing system, adds all material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The information that follows relates to the period just ended:

Units started and completed: 94,000
Units in ending work-in-process inventory: 15,800, 70% complete

Which of the following choices correctly expresses the total equivalent units of production with respect to material and conversion cost?

Material Conversion
A. 94,000 94,000
B. 105,060 105,060
C. 109,800 98,740
D. 109,800 105,060
E. 109,800 109,800

Multiple Choice

  • Choice A

  • Choice B

  • Choice C

  • Choice D

  • Choice E

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Answer #1

Equivalent units with respect to material = Units started and completed + Units in ending work in process inventory

= 94,000 + 15,800

= 109,800

Equivalent units with respect to convesion = Units started and completed + Units in ending work in process inventory

= 94,000 + (15,800 * 70%)

= 105,060

The answer is Option D.

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