Question

1. Inventory at the beginning of August in a particular department contained 10,000 units of goods that were 40% complete for conversion. 25,000 units were completed and transferred out of the department during August. 2,000 were still in process at the end of August and were 50% complete for conversion. Assume there was no spoilage. The equivalent units to be used to get the average conversion costs per unit for the period under the FIFO method are:

1. 24,400

2. 19,600

3. 22,000

4. Cannot be determined with the given data.

2. Woodcraft Furniture had 90,000 foam cushions in beginning inventory in process as of May 1 (80% converted) and 20,000 cushions in process as of May 31 (50% converted) in its finishing department. During the month, 140,000 cushions were transferred out to finished goods warehouse from the Finishing department. Assume there was no spoilage. The equivalent units to be used to calculate average conversion costs for May for the Finishing department using the Weighted Average method are:

1. 66,000 cushions

2. 166,000 cushions

3. 132,000 cushions

4. 150,000 cushions

Answer 1

	1	FIFO Method
						During the Month
Beginning	10,000	40%	Converted		6,000	60 % Conversion Completed
Completed & Transferred	25,000		Converted		15,000	100 % Conversion Completed
WIP	2,000	50%	Converted		1,000	50 % Conversion Completed
			Equivalent Units		22,000
	2	Weighted Average Method
Beginning	90,000	80%	Converted
WIP	20,000	50%	Converted		10,000	50 % Conversion Completed
Transferred to Finished Goods Warehouse	140,000	100%	Converted		140,000	100 % Conversion Completed
			Equivalent Units		150,000