The Following Information Is Provided by Gibson Company The Units in Ending WIP Inventory Were 85% Complete for |

question 76

Essay

The following information is provided by Gibson Company:
$$\begin{array} { | l | r | } \hline \text { WIP inventory, January 1 } & \text { 0 units } \\\hline \text { Units started } & 20,000 \text { urits } \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 17,500 \text { units } \\\hline \text { WIP inventory, December 31 } & 2,500 \text { units } \\\hline \text { Direct materials } & \$ 25,300 \\\hline \text { Direct labor } & \$ 17,400 \\\hline \text { Manufacturing overhead } & \$ 26,700 \\\hline\end{array}$$ The units in ending WIP inventory were 85% complete for materials and 35% complete for conversion costs.
Required
a.What are the total equivalent units for direct materials?
b.At the end of the year,what are the equivalent units for conversion costs?

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Definitions:

Acronym

A word formed from the initial letters of a name or by combining initial letters or parts of a series of words.

FOB

Free On Board; a term in international commercial law specifying at what point the risk of loss shifts from the seller to the buyer.

Trade-In Allowance

The amount credited to the buyer by the seller when the buyer gives a previously owned product as part of the payment for a new product.

Price Reduction

A decrease in the price of a product or service, often to attract more customers or respond to market conditions.