Question

Refer to Short Exercise S18-5. At Spring Fresh, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process. Now assume that in February, 155,000 liters were completed and transferred out of the Filtration Department into the Bottling Department. The 45,000 liters remaining in Filtration’s ending Work-in-Process Inventory were 80% of the way through the filtration process. Recall that Spring Fresh has no beginning inventories.

Compute the equivalent units of production for direct materials and conversion

costs for the Filtration Department.

Short answer

The equivalent unit of production for direct material is 195,000 liters, and the conversion cost is 191,000 liters.

Step-by-step solution

Step-by-Step Solution:Step 1: Direct Material Cost

Direct material cost means the cost incurred by the company on the raw material and other components which are directly used in the manufacturing of the final products.

Equivalent unit of production for direct material

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{direct}\mathbf{}\mathbf{material}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{}\mathbf{percentage})\mathbf{+}(\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{}\mathbf{percentage}) \\ \mathbf{=}(\mathbf{155}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{45}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%}) \\ \mathbf{=}\mathbf{195}\mathbf{,}\mathbf{000}\text{}\mathbf{liters} \end{gathered}$$

Equivalent unit of production for conversion costs

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{conversion}\mathbf{}\mathbf{costs}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{}\mathbf{percentage})\mathbf{+}(\mathbf{WIP}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{}\mathbf{percentage}) \\ \mathbf{=}(\mathbf{155}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{45}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{80}\mathbf{\%}) \\ \mathbf{=}\mathbf{191}\mathbf{,}\mathbf{000}\text{}\mathbf{liters} \end{gathered}$$