Compute the equivalent units of production of conversion cost:

a. In Process, beginning (3/5 additional work to be done), 24,000 units

b. Completed and Transferred-out units, 150,000 units (Of the units started in process, ½ represents work in process at the end, which were 40% completed during the current period) 

EUP using Average costing:

a. 174,000

b. 200,400

c. 190,800

d. 158,400

The equivalent units of production (EUP) of conversion costs is 200,400. The correct answer is the option (d).

Compute the equivalent units of production (EUP) of conversion cost as follows: -

EUP = (Completed Units x 100%) + {Ending Inventory Units (see Working Note 2) x Percentage of Work done on Ending Inventory units for Conversion Costs}

= (150,000 x 100%) + (126,000 x 40%)

EUP = 200,400.

Working Note 1: Compute units started in the process as follows: -

Assume "X" units have started in the process then, we have following equation: -

Beginning Inventory Units + Started Units = Completed Units + Ending Inventory Units

24,000 + X = 150,000 + (X x 50%)

X = 252,000

Units started in the process is 252,000.

Working Note 2: Compute the ending inventory units as follows: -

Ending Inventory Units = Started Units x 50%

= 252,000 x 50%

Ending Inventory Units = 126,000.

Note: Under average method for EUP computation, the work done on the beginning inventory in the previous period is not considered.