The Converting Department of Stay-Soft Napkin company had 760 units in the work

Question

The Converting Department of Stay-Soft Napkin company had 760 units in the work in process at the beginning of the period, which were 75% complete. During the period, 15,400 units were completed and transferred to the Packing Department. There were 1,000 units in process at the end of the period, which were 30% complete. Direct materials are placed into the process at the beginning of production. Determine the number of equivalent units of production with respect to direct materials and conversion costs.

Explanation / Answer

Equivalent units: When partially completed units are converted into comparable number of completed units, they are referred to as equivalent units. Equivalent units with respect to direct material = 760 + 15,400 + 1,000 So equivalent units with respect to direct material = 17,160 units. Equivalent units with respect to conversion costs = (760 x 75%) + 15,400 + (1,000 x 30%)                                                                          = 570 + 15,400 + 300 Equivalent units with respect to conversion costs = 16,270. When partially completed units are converted into comparable number of completed units, they are referred to as equivalent units. Equivalent units with respect to direct material = 760 + 15,400 + 1,000 So equivalent units with respect to direct material = 17,160 units. Equivalent units with respect to conversion costs = (760 x 75%) + 15,400 + (1,000 x 30%)                                                                          = 570 + 15,400 + 300 Equivalent units with respect to conversion costs = 16,270.

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