Monga manufactures cell phones. The conversion costs to produce cell phones for November are added evenly throughout the process in the Assembly Department. The company uses the weighted-average method. For each of the following separate assumptions, calculate the equivalent units of production for conversion costs in the ending Work-in-Process Inventory for the Assembly Department:
1. 15,000 cell phones were 75% complete
2. 20,000 cell phones were 25% complete
First, determine the formula for calculating equivalent units of production. (Abbreviation used: WIP-Work-in-Process Inventory)
Equivalent units of production
Assumption 1. 15,000 cell phones were 75% complete
The equivalent units for conversion costs is
Assumption 2. 20,000 cell phones were 25% complete
The equivalent units for conversion costs is

The equivalent unit of production is the degree of completion of production. It is given by the formula: units under production x degree of completion.

Assumption 1: 15,000 cell phones were 75% complete

The equivalent units for conversion costs is 11,250 cell phones

Assumption 2. 20,000 cell phones were 25% complete

The equivalent units for conversion costs is 5,000 cell phones

Explanation:

Monga's equivalent units of production in Ending WIP Inventory shows the product of the degree completion and the units under production at the ending period. It is a way of determining how much cost has been incurred in production so that the appropriate cost can be attributed to each stage of the production process. Equivalent units calculation is, therefore, a way of assigning weights to units in the process of production.