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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) 20,000 $ 232,200 Units started and costs incurred during December 108,000 1,306,800 Units completed and transferred to next department during December 80,000 ? 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. (Round your answers to 2 decimal places.)

a-3. What was the conversion cost of work-in-process inventory in the Oils Division at December 31? (Do not round intermediate calculations.)

b. What were the conversion costs per equivalent unit produced last period and this period, respectively? (Round your answers to 4 decimal places.)

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Homework Answers

Answer #1

SOLUTION:

a-1. Process the proportionate units for change costs.

Equal units = 88,000

Conversion Costs
Units in beginning WIP (A)    20,000

% of completion of beginning WIP in previous period (B)

    0.80
% of beginning WIP completed this period [C=100%-B] 0.20
Equivalent units in beginning WIP [D=A×C] 4,000
Units started and completed in current period 60,000
Units closing WIP (E) 48,000
% of completion of closing WIP (F) 0.50
Equivalent units in closing WIP (G=E×F) 24,000
Total equivalent units 88,000

a-2. Register the expense per identical unit for transformation costs.

Change cost amid the year = $1,306,800

Identical unit = 88,000

Cost per identical unit for change costs = $1,306,800/88,000

= $14.85

a-3.What was the change cost of work-in-process stock in the Oils Division at December 31.

Unit in endning stock = (48,000 x 0.50) x $14.85

change cost of work-in-process stock = $356,400

b. What were the transformation costs per comparable unit created last period and this period, individually.

Past period = $232,000/20,000 = $11.60

Current period = $356,400/24,000 = $14.85

THANK YOU.

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