Question

Equivalent Units of Conversion Costs

The Rolling Department of Kraus Steel Company had 8,503 tons in beginning work in process inventory (90% complete) on October 1. During October, 77,300 tons were completed. The ending work in process inventory on October 31 was 6,184 tons (60% complete).

What are the total equivalent units for conversion costs? Round to the nearest whole unit.
units

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Are you determining the equivalent units of materials added or of conversion of materials? When would materials typically be added in the process? When would conversion of these materials take place? Recall the definition of work in process.

Answer 1

Computation of Equivalent units for Conversion Costs:
	Units	% of Completion	Equivalent Units
Beginning Work in Process Inventory	8,503	10%	850
Units Started and Completed (77,300-8,503)	68,797	100%	68,797
Ending Work in Process Inventory	6,184	60%	3,710
			73,358

The above calculation is the determination of conversion of materials.

Materials would be typically added at the beginning of the process.

Conversion of the materials takes place during the process.

Work in Process is the inventory which is under the process of raw materials for the production of finished goods.