Answers
Equivalent ubnits = Number of physical units X Percentage of completion
When units of WIP inventory exist at the end of the reporting period, process costing requires that these partially completed units be converted to the equivalent completed units.
Particulars Units in WIP Equivalent units Beginning WIP (Note 1) WIP during period Ending WIP (Note 2) Total 5,200 47,500 3,300 % of completion during the period 90% 100% 50% 4,680 47,500 1,650 53,830 Total equivalent units for the conversion cost = 53,830 units Note 1: In case of beginning WIP unit, 10% is completed during last year whereas 90% of beginning WIP is completed during current year. Therefore equivalent units are calculated by taking 90% which is completed during the period. Note 2: Given that 50% of ending WIP completed during this year, therefore equivalent units are calculated by taking 50% which is completed during the period.
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