Question

The following information is available from the Oils Division of Glasgow Corporation for December. Conversion costs...

The following information is available from the Oils Division of Glasgow Corporation for December. Conversion costs for this division were 80 percent complete as to beginning work-in-process inventory and 50 percent complete as to ending work-in-process inventory. Information about conversion costs follows.

Units Conversion Costs
WIP at December 1 (80% complete) 102,000 $ 395,760
Units started and costs incurred during December 542,000 2,229,070
Units completed and transferred to next department during December 402,000 ?

The Oils Division uses FIFO.

Required:

a-1. Compute the equivalent units for conversion costs.

a-2. Compute the cost per equivalent unit for conversion costs.

a-3. What was the conversion cost of work-in-process inventory in the Oils Division at December 31?

b. What were the conversion costs per equivalent unit produced last period and this period, respectively?

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Answer #1
working Physical units Equivalent units
WIP at December 1 (80% complete) 1,02,000 20400 (102000*20%)
Units started and completed during December (402000-102000) 3,00,000 3,00,000
Units completed and transferred to next department during December 4,02,000
Unist in ending Invetory (542000-300000) 2,42,000 121000 (242000*50% completed)
Total equivalent units 4,41,400
a-1 the equivalent units for conversion costs. 4,41,400
a-2 the cost per equivalent unit for conversion costs. (2229070/441400) $5.05
a-3. conversion cost of work-in-process inventory in the Oils Division at December 31 $6,11,050
(121000*5.05)
ans 4 This period Last period
conversion costs per equivalent unit $5.05 4.85
395760/(102000*80%)
The cost increased
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