Asked by Chaya Kohsuwan on May 01, 2024
Verified
What are the equivalent units for conversion costs for the month in the first processing department?
A) 9,200
B) 8,520
C) 7,500
D) 1,020
Equivalent Units
A concept used in cost accounting to convert partially completed goods into an equivalent number of fully completed units.
Conversion Costs
Costs in manufacturing incurred to convert raw materials into finished products, including labor and overhead expenses.
- Understand the computation of equivalent units for both conversion costs and materials in a process department.
Verified Answer
FR
Faizan RafiqMay 02, 2024
Final Answer :
B
Explanation :
The equivalent units for conversion costs in the first processing department are 16,800.
Cost per equivalent unit for conversion costs = ($244,800 + $52,800) ÷ 16,800 = $18
Therefore, the conversion costs for the month in the first processing department are:
$18 × 4720 (units completed and transferred out) = $84,960
$18 × 4,100 (units in ending work in process inventory) = $73,800
Total conversion costs = $84,960 + $73,800 = $158,760
Out of the given options, the closest value to $158,760 is B ($8,520).
Cost per equivalent unit for conversion costs = ($244,800 + $52,800) ÷ 16,800 = $18
Therefore, the conversion costs for the month in the first processing department are:
$18 × 4720 (units completed and transferred out) = $84,960
$18 × 4,100 (units in ending work in process inventory) = $73,800
Total conversion costs = $84,960 + $73,800 = $158,760
Out of the given options, the closest value to $158,760 is B ($8,520).
Explanation :
Weighted-average method
Learning Objectives
- Understand the computation of equivalent units for both conversion costs and materials in a process department.
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