Question

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. WIP at December 1 (80% complete) Units started and costs incurred during December Units completed and transferred to next department during December care nt during peace Conversion Units Costs 20,000 $ 232, 200 108,000 1,306,800 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. 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?

Answer 1

a1) Equivalent unit of conversion = (20000*20%+60000+48000*50%) = 88000

a2) Cost per equivalent unit = 1306800/88000 = 14.85

a3) Cost of inventory = 48000*50%*14.85 = $356400

a4) Last period conversion Cost = 232200/16000 = 14.5125

This period = 14.85

Answer 2

20,000+108,000=  128,000

physical                          equivalent

20,000

                                         4,000        =20,000*20%(100%-80%)

60,000                            60,000        =80,000-20,000

 48,000   =108,000-60,000

                                       24,000      =48,000*50%

+______                        + _________

128,000                           88,000(answer for part A1)

A2) 1,306,800/ 88,000= 14.85 (Answer A2)

A3) 24,000*14.85= 356,400 (answer A3)

B) step 1) 20,000*80%= 16,000 

previous period: 232,200/16,000= 14.5125 (answer for B)

current period= 14.85 (answer for B)