Question

Gatlin Manufacturing adds direct materials at the beginning of the production process, while conversion costs are incurred uniformly throughout the process. At the end of the period, equivalent units for direct materials were 250 more than equivalent units for conversion costs. 1,000 units were started during the period, and 1,000 units were also completed. Ending Work in Process Inventory was 50% complete. How many physical units were in ending Work in Process Inventory?

Answer 1

Solution:

Since, at the end of the period, equivalent units for direct materials were 250 more than equivalent units for conversion costs.

And % completion for Materials = 100 %

% completion for Conversion = 50%

Therefore equivalent units for direct materials will be double of equivalent units for conversion costs.

Now, since equivalent units for direct materials are 250 more than equivalent units for conversion costs,

Hence equivalent units for conversion costs = 250 units only

And equivalent units for direct materials = 250 + 250 = 500 units

Hence, Physical units in ending Work in Process = 250/Percentage completion for Ending Work in Process Inventory

= 250 / 50% = 500 units