Bright Colors Company placed 315,000 gallons of direct materials into the mixing process

All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Bright Colors uses weighted-average costing. The initial forecast for the end of the month was to have 75,000 gallons still in process, 15% converted as to labor and factory overhead.

Required:
a. Determine the total equivalent units (in process and transferred out) for direct materials and for conversion costs, assuming there was no beginning inventory.

b. With the installation of a new paint processing filtration device, the forecast for the end of the month was to have 50,000 gallons still in process, 70% converted as to labor and factory overhead. In this event, determine the equivalent units (in process and transferred out) for direct materials and for conversion costs, assuming there was no beginning inventory.

Answer:
a. Direct materials:
Beginning inventory 0 gallons
Units started 315,000 gallons
Equivalent units 315,000 gallons

Conversion costs:
Beginning inventory 0 gallons
Units started 315,000 gallons
To account for 315,000 gallons
Units transferred out 240,000 gallons
Ending inventory 75,000 gallons

Units transferred out 240,000 gallons
Ending inventory, 15% complete 11,250 gallons
Equivalent units 251,250 gallons

b. Direct materials:
Beginning inventory 0 gallons
Units started 315,000 gallons
Equivalent units 315,000 gallons

Conversion costs:
Beginning inventory 0 gallons
Units started 315,000 gallons
To account for 315,000 gallons
Units transferred out 265,000 gallons
Ending inventory 50,000 gallons

Units transferred out 265,000 gallons
Ending inventory, 70% complete 35,000 gallons
Equivalent units 300,000 gallons