Question

Equivalent Units of Conversion Costs The Rolling Department of Oak Ridge Steel Company had 10,206 tons in beginning work in process inventory (10% complete) on July 1. During July, 72,900 tons were completed. The ending work in process inventory on July 31 was 6,561 tons (50% complete). What are the total equivalent units for conversion costs? Round to the nearest whole unit.

______ units

Answer 1

Answer

• There can be two possible answers because method to compute the equivalent unit is not provided.
• Hence, I’m providing both the possible answers, by FIFO method as well as Weighted Average method.
• Equivalent unit for conversion cost by FIFO Method
  = 75,160 units Answer

EUP - FIFO Method	Units	% Conversion	EUP - Conversion
Units of ENDING WIP	6,561	50.0%	3,281
Units STARTED & COMPLETED	62,694 [72900 – 10206]	100%	62,694
Units of beginning WIP	10,206	90% [10% was already complete]	9,185
Equivalent Units of Production			75,160 Answer

• Equivalent unit for conversion cost by Weighted Average Method
  = 76,181 units Answer

EUP - Weighted Average Method	Units	% Conversion	EUP - Conversion
Units TRANSFERRED	72,900	100%	72,900
Units of ENDING WIP	6,561	50%	3,281
Equivalent Units of Production			76,181