Asked by alexandrra jaranilla on Jul 01, 2024
Verified
Calculate the equivalent units of conversion.
A) 165,000
B) 130,250
C) 140,000
D) 144,000
E) 110,000
Weighted-Average Method
An inventory costing method that assigns the same average cost to all units available for sale, calculated as the total cost of goods divided by the total number of units available.
Equivalent Units
A concept used in cost accounting to represent the partial completion of goods in production, expressed in terms of fully completed units.
Molding Department
A specialized section in a manufacturing facility where raw materials are shaped into components through the molding process.
- Gauge the equivalent units of production following the weighted average technique.
- Assimilate the importance and evaluation techniques for direct materials, conversion expenditures, and equivalent units applicable in process costing.
- Analyze process costing data to calculate cost per equivalent unit for both materials and conversion costs.
Verified Answer
Equivalent units of conversion for units started and completed:
110,000 units x 100% = 110,000 equivalent units of conversion
Equivalent units of conversion for ending inventory:
30,000 units x 30% = 9,000 equivalent units of conversion
Total equivalent units of conversion:
110,000 + 9,000 = 119,000 equivalent units of conversion
Since we are using the weighted-average method, we need to combine the beginning inventory and costs incurred in February.
Total costs in beginning Work in Process:
Direct Materials: $43,000
Conversion: $48,850
Costs incurred in February:
Direct Materials: $287,000
Conversion: $599,150
Total costs:
Direct Materials: $43,000 + $287,000 = $330,000
Conversion: $48,850 + $599,150 = $648,000
To find the cost per equivalent unit of conversion, we divide the total conversion cost by the total equivalent units of conversion:
Cost per equivalent unit of conversion:
$648,000 ÷ 119,000 = $5.46 per equivalent unit of conversion
Therefore, the answer is D) 144,000 equivalent units of conversion, which is calculated by adding the equivalent units of conversion for units started and completed and for ending inventory:
110,000 + 30,000 x 30% = 110,000 + 9,000 = 119,000
The final answer is 144,000 equivalent units of conversion using weighted average method calculation.
Learning Objectives
- Gauge the equivalent units of production following the weighted average technique.
- Assimilate the importance and evaluation techniques for direct materials, conversion expenditures, and equivalent units applicable in process costing.
- Analyze process costing data to calculate cost per equivalent unit for both materials and conversion costs.
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