The equivalent units of production
The Smelting Department of Crane Company has the following production data for November.
Beginning work in process 2,080 units that are 100% complete as to materials and 20% complete as to conversion costs; units completed and transferred out 9,360 units; and ending work in process 7,280 units that are 100% complete as to materials and 40% complete as to conversion costs.
Compute the equivalent units of production for (a) materials and (b) conversion costs for the month of November.
Sample Solution
(a) Equivalent units of production for materials =
Units completed and transferred out (9,360) + Ending work in process (7,280 x 100%) = 16,640 equivalent units.
Step by Step:
1. Calculate the total number of equivalent units of production for materials by adding the total number of units completed and transferred out to the total number of ending work in process that is 100% complete as to materials.
2. 9,360+7,280=16,640 equivalent units for materials
(b) Equivalent units of production for conversion costs =
Units completed and transferred out (9,360 x 80%) + Ending work in process (7,280 x 40%) = 10752 equivalent units.
Step by Step:
1. Calculate the total number of equivalent unitsof productionfor conversion costs byaddingthetotalnumberofunitscompletedandtransferredoutthatare80%completeastoconversioncoststothetotalnumberofendingworkinprocessthatis40%completeastoconversioncosts.
2. 9,360x0.8+ 7,280x0.4=10752equivalentunitsforconversioncosts