Asked by Jordan Parker on May 27, 2024
Verified
Ozdemir Corporation uses the first-in, first-out method in its process costing system. Data concerning the first processing department for the most recent month are listed below: What are the equivalent units for conversion costs for the month in the first processing department?
A) 1,015
B) 5,050
C) 6,920
D) 7,450
Equivalent Units
A concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units.
- Work out the equivalent unit cost associated with materials and conversion expenses.
Verified Answer
BA
brooke alexandraMay 31, 2024
Final Answer :
C
Explanation :
The equivalent units for conversion costs are calculated by converting the partially completed units in terms of the amount of conversion costs that have been incurred on them.
Equivalent units for conversion costs = Units completed and transferred out + (Units in ending work in process inventory x percentage of completion for conversion costs)
Units completed and transferred out = 25,000 units
Units in ending work in process inventory = 2,300 units
Percentage of completion for conversion costs = 80%
Equivalent units for conversion costs = 25,000 + (2,300 x 0.80) = 6,920 units
Equivalent units for conversion costs = Units completed and transferred out + (Units in ending work in process inventory x percentage of completion for conversion costs)
Units completed and transferred out = 25,000 units
Units in ending work in process inventory = 2,300 units
Percentage of completion for conversion costs = 80%
Equivalent units for conversion costs = 25,000 + (2,300 x 0.80) = 6,920 units
Learning Objectives
- Work out the equivalent unit cost associated with materials and conversion expenses.
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