Question

Oxford, Inc., which uses a process-cost accounting system, began operations on January 1 of the current year. The company incurs conversion cost evenly throughout manufacturing. If Oxford started work on 3,000 units during the period and these units were 70% of the way through manufacturing, it would be correct to say that the company has:


a. 900 equivalent units of production.

b. 900 in-process units.

c. 2,100 completed units.

d. 3,000 physical units in production.

e. 3,000 equivalent units of production.

Answer 1

Answer:

Option C

2,100 completed units.

Explanation:

Equivalent Units E.U) are notional whole units which represent incomplete work and are used to apportion costs between between work in progress and completed work.

Equivalent units are computed  as  follows:

Equivalent Units = Degree of completion (%) × units

equivalent unit of conversion cost = 70%  × 3,000 = 2,100 units