At Crenshaw Company materials are entered at the beginning o

At Crenshaw Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion, and production data for its Painting Department in selected months are as follows: Beginning Work In Process Ending Work in Process Month Units Percentage Completed Units Completed and Transferred Out Units Percentage Completed July 0 - 11,000 1,500 90% Sept. 2,500 20% 9,000 5,000 70% Compute the physical units for July Compute the equivalent units of production for materials and conversion costs for September.

Solution

Requirement 1:

Computation of Physical units for the month of July:

Month

July

Beginning work in process

0

Started in to production

12,500

Total units to be accounted for

12,500

Units transferred out

11,000

Add: Ending work in process

1,500

Total units accounted for

12,500

Requirement 2:

Computation of Equivalent units for the month of September:

Equivalent Units

Physical units

Material

Conversion

Units completed and transferred out

9,000

9,000

9,000

Add: Ending work in process

5,000

5,000

*3,500

Total equivalent units

14,000

14,000

12,500

*Ending WIP Units completed w.r.t. conversion cost = WIP units x % completed

                                                                                   = 5,000 x 70 % = 5,000 x 0.7

                                                                                    = 3,500