Asked by Jesse Francis on May 10, 2024
Verified
Bistrol Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were: A total of 8,400 units were started and 7,500 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
The ending inventory was 70% complete with respect to materials and 60% complete with respect to conversion costs.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 process costing that converts partially completed units into a number of fully completed units.
Conversion Costs
The combined costs of direct labor and manufacturing overhead, representing the expenses incurred in converting raw materials into finished products.
Processing Department
A specific department within a factory where a particular stage of production is carried out, such as assembly or painting.
- Determine the equivalent units for materials and conversion costs.
Verified Answer
Units started during the month = 8,400 units
Units in ending inventory = 900 units (1,500 units - 600 units)
For conversion costs, we need to consider both materials and labor. From the information given, we know that the beginning inventory was 30% complete for conversion costs (meaning 70% remain to be completed), and the ending inventory was 60% complete for conversion costs (meaning 40% have already been completed).
Equivalent units for conversion costs =
Units started during the month + (Units in ending inventory x % completion)
= 8,400 + (900 x 40%)
= 8,520
Therefore, the answer is B) 8,520.
Learning Objectives
- Determine the equivalent units for materials and conversion costs.
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