Orlando Stone Company produces patio blocks. Though the company has been in oper

Question

Orlando Stone Company produces patio blocks. Though the company has been in operation for only 12 months, it already enjoys a good reputation. During it's 1st year, it put 700,000 blocks into production and complete and transferred 574,000 blocks to finished goods inventory. The remaining blocks were still in process at the end of the year and were 45% complete. The company's process costing. System adds all direct materials, costs at the beginning of the process, conversion costs are incurred uniformly throughout the production process. Required: Determine the number of equivalent units of production with respect to direct materials.

Explanation / Answer

Number of equivalent units of Production = Finished units + partially completed units

   = 574000 + 56700

   = 630700 units

Note: partial completed units

total units in production = 700000

Less: completed units = 574000

Remaining work in progress units = 126000

45% completed units = 45% * 126000 = 56700 units

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