Question

In Shady Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion costs, and production data for its Sterilizing Department in selected months during 2020 are as follows.

		Beginning Work in Process						Ending Work in Process
Month		Units		Conversion Cost%		Units Transferred Out		Units		Conversion Cost%
January		0		—		11,900		3,100		68
March		0		—		13,100		3,700		33
May		0		—		14,900		7,930		80
July		0		—		11,600		2,100		44

Part 1

Compute the physical units for January and May.

		January		May
Units to be accounted for
Beginning work in process
Started into production
Total units
Units accounted for
Transferred out
Ending work in process
Total units

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Part 2

Compute the equivalent units of production for (1) materials and (2) conversion costs for each month.

		Materials		Conversion Costs
January
March
May
July

Answer 1

Answer : Calculation of Physical Units for January and May

	January	May
Units to be accounted for
Beginning work in process	0	0
Started into production (Units Transferred + Ending WIP units)	15000	22830
Total units	15000	22830

	January	May
Units to be accounted for
Transferred out	11900	14900
Ending work in process	3100	7930
Total units	15000	22830

Computation of Equivalent Units

	Material (Units Transferred + Ending WIP)	Conversion Cost [Units Transferred + (Conversion % * Ending WIP)]
January	15000	14008 [11900 + (3100 * 68%)]
March	16800	14321[13100 + (3700 * 33%)]
May	22830	21244[14900 + (7930 * 80%)]
July	13700	12524 [11600 + (2100*44%)]