1.

Equivalent Units of Conversion and Materials:

o For materials, since they are added at the beginning of the process, all
units started would have been fully processed for materials. So, the
equivalent units for materials would be the total units started = 15,000
gallons.

o For conversion costs, we need to account for the work done on the
ending work-in-process inventory. The ending inventory was 50%
complete with respect to conversion costs. So, the equivalent units for
conversion would be the units fully completed plus the equivalent units
in the ending work-in-process inventory = (15,000 - 2,000) + 0.5 *
2,000 = 13,000 + 1,000 = 14,000 gallons.

2. Cost per Equivalent Unit of Conversion and Materials:

o The cost per equivalent unit for materials = total materials costs /
equivalent units for materials = $45,000 / 15,000 = $3 per gallon.

o The cost per equivalent unit for conversion = total conversion costs /
equivalent units for conversion = $28,000 / 14,000 = $2 per gallon.

3. Cost of Ending Inventory and Cost Transferred to Finished Goods

Inventory:

o The cost of the ending inventory = cost per equivalent unit of materials
* ending units + cost per equivalent unit of conversion * ending
equivalent units for conversion = $3 * 2,000 + $2 * (0.5 * 2,000) =
$6,000 + $2,000 = $8,000.

o The cost transferred to the finished goods inventory = total costs - cost
of ending inventory = ($45,000 + $28,000) - $8,000 = $65,000 -
$8,000 = $57,000.