The Assembly Department of Zedco Ltd

question 118

Essay

The Assembly Department of Zedco Ltd. had 25,000 partially completed units in work in process at the end of August. Only 60% of the direct materials had been added to these units, and the units were 75% of the way through the conversion process. In addition, 400,000 units had been completed and transferred out of the Baking Department to the Packaging Department during the month.
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:

Current Ratio

A financial metric used to evaluate a company's ability to pay short-term obligations with its short-term assets.

Current Assets

Short-term resources expected to be converted into cash within one year, including cash, inventory, and accounts receivable.

Current Liabilities

Obligations or debts that a company is expected to pay off within one year or within its normal operating cycle, whichever is longer.

Creditor's Decision

The process through which a creditor analyzes the financial stability and creditworthiness of potential borrowers before lending money.