7. Cohen Company is trying to determine the equivalent units for conversion cost

Question

7. Cohen Company is trying to determine the equivalent units for conversion costs with 5000 units of ending work in process at 80% completion. There were 45000 equivalent units of production for materials. There are no beginning units in the department. All materials are added at the beginning of the process, and conversion costs occur evenly throughout the entire production period. What is the equivalent units of production for conversion costs for the current period? a. 44000. b. 4000. C. 49000. d. 50000

Explanation / Answer

Equivalent unit of production for Material is 45,000

and as there is no opening WIP so this equivalent unit is for the goods transferred out and in closing WIP

Now Goods transferred out is 40,000 so whole of 40,000 units will be part of conversion cost

Closing WIP is 5,000 which is 80% complete so 5,000*80% = 4,000 will be part of conversion cost

Therefore, equivalent unit of prod for Conversin cost is 44,000

Correct answer is A.

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