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9 June, 12:53

Fabian Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 9,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 90,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 87,000 units were completed in the Assembly Department and transferred to the next processing department. There were 12,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month

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  1. 9 June, 13:21
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    The equivalent unit for conversion cost is 89,400 units.

    Explanation:

    To calculate the the equivalent units for conversion costs in the Assembly Department for the month we have first to Compute the opening WIP units for conversion cost as follows:

    Opening WIP units=Units Opening WIP * Percentage of workcompleted

    =9,000*100%

    =9,000 units



    Then, we have to Compute the units transferred during the period for the conversion cost as follows:

    UnitsTransferred=Units*Work Percentage

    =90,000*100%

    =90,000



    Then, Compute the total units for conversion cost as follows:

    Total Units=Opening WIP units+Units Transferred

    =9,000 units+90,000 units

    =99,000 units



    Then, Compute the incomplete units of closing WIP for conversion cost as follows:

    Incomplete units=Closing WIP*Percentage of work incomplete

    =12,000 * (1-20%)

    =12,000*80%

    =9,600 units



    Finally to Compute the equivalent units for conversion cost we have to make the following calculation:

    Equivalent Units=Total Units-Incomplete units

    =99,000 units-9,600 units

    =89,400 units



    The equivalent unit for conversion cost is 89,400 units.
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