Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted−average costing.

Data for the Assembly Department for June 2017 are:

Work in process, beginning inventory 380 units
Direct materials (100% complete)
Conversion costs (60% complete)
Units started during June 950 units
Work in process, ending inventory: 150 units
Direct materials (100% complete)
Conversion costs (80% complete) Costs for June 2017:
Work in process, beginning inventory:
Direct materials $91,000
Conversion costs $137,500
Direct materials costs added during June $604,000
Conversion costs added during June $401,000

What are the equivalent units for direct materials and conversion costs, respectively, for June?

the equivalent units for direct materials and conversion costs, respectively, for June are:

direct materials = 1,330 units

conversion costs = 1,300 units

Explanation:

The Concept of Equivalent Units measures the number of units of output (Ending Work In Process and Completed and Transferred Out) of a process in terms of percentage of completion of an input in the process.

First Determine the Number of Units transferred out of the Process

Hint : Units IN must equal Units OUT

Number of Units transferred out    = 380+950-150

                                                         = 1,180

Determine the Equivalent Units for direct materials and conversion costs

Direct materials :

Completed and Transferred Out  ( 1,180× 100%) = 1180

Ending Work In Process Inventory( 150 × 100%) =  150

Total                                                                       =  1,330

Conversion costs :

Completed and Transferred Out  ( 1,180× 100%) = 1,180

Ending Work In Process Inventory( 150 × 80%)   =   120

Total                                                                        = 1,300

Direct material = 1,330units

Conversion cost = 1,300units

Explanation:

The idea of Equivalent Units evaluates the number of units of output of a process in terms of percentage of finishing of an input in the process.

We should determine the Number of Units transferred out of the Process

Which is

Number of Units transferred out    =950+380+150= $1,180

Let's also find the Equivalent Units for direct materials and conversion costs

Direct material is calculated as

Completed and Transferred Out  ( 1,180× 100%) = 1180

Ending Work In Process Inventory( 150 × 100%) =  150

= 150+ 1180

Total  =  $1,330

Costs of conversion is calculated as

Completed and Transferred Out  ( 1,180× 100%) = 1,180

Ending Work In Process Inventory( 150 × 80%)   =   120

= 1180+120

Total= $1,300

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