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No losses or gains occur in a manufacturing process. There was no work-in-progress at the start of a period during
which 9,600 litres of a raw material were input to the process. 8,700 litres of finished product were output from the
process in the period. The stage of completion of the work-in-progress was:
Materials 100%
Conversion costs 60%
What were the equivalent units of production in the period?
Materials Conversion costs
A 8,700 8,700
B 8,700 9,060
C 9,600 9,240
D 9,600 9,600All units take 100% material, so 9,600 for material.
There are 9,600 – 8,700 = litres of amterial in wip = 900.
If 60% complete with regard to converions, this is equivalent to 60% x 900 = 540.
8,700 + 540 = 9,240
So, answer C
You are trying to work out where the material anc conversion costs have gone.
Material has gone into finished units and WIP and both types of units have 100% their share of material.
Conversion costs have gone into the finished units but have also been used to take the WiP to its present condition ie 900 units 60% complete. This is like 60% x 900 = 540 whole units.
Therefore the conversion costs have been spread over the equivalent of 9240 units
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