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Equivalent units and costs

Binding Company prints calendars. All direct materials are included at the inception of the printing process. There were 20,000 units in beginning inventory with a direct material cost of $1,000 and conversion cost of $3,760 in March. Direct materials totaled $26,000 for the month. Conversion costs were $20,000 Work-in-process records revealed that 160,000 calendars were started in March and that 144,000 were completed. Ending work-in-process units are complete with respect to direct materials costs and 40% complete with respect to conversion cost. The weighted-average method is used by Binding Company.

a. Determine the equivalent units of conversion.

b. What is the conversion costs assigned to completed calendars?

c. What amount of conversion is assigned to the ending work-in-
process inventory?

Solution Preview

a. Determine the equivalent units of conversion.

Equivalent units = Units completed X 100% + Units in ending inventory X percentage complete
Total units to account for = units in beginning inventory + units started = 20,000+160,000=180,000
Units ...

Solution Summary

The solution explains how to calculate the equivalent units and the assignment of costs to these units.