Question

Iowa Company uses a process costing system. Operating data for the first processing department for the month of June appear below:

	Units			Percent Complete with Respect to Conversion
Beginning work-in-process inventory		12,000				60%
Started into production during June		80,000
Ending work-in-process inventory		18,000				40	%

According to the company's records, the conversion cost in beginning work-in-process inventory was $44,530 at the beginning of June. Additional conversion costs of $832,150 were incurred in the department during the month.

1. How many units are transferred out?

   2. If Iowa uses the weighted-average method, what are the equivalent units of conversion for the month?

If Iowa uses the weighted-average method, what is the cost per equivalent units of conversion for the month?

3.  If Iowa uses the FIFO method, what are the equivalent units of conversion for the month?

     If Iowa uses the FIFO method, what is the cost per equivalent units of conversion for the month?

Answer 1

• [1] Units transferred out = 12000 + 80000 – 18000 = 74000 units
• [2]

Equivalent units of conversion = 81200 units

EUP - Weighted Average Method	Units	% Conversion	EUP - Conversion
Units TRANSFERRED	74,000	100%	74,000
Units of ENDING WIP	18,000	40%	7,200
Equivalent Units of Production			81,200

Cost per equivalent units of conversion = $ 10.80 (or $ 10.79655)

COST per EUP		Conversion
Cost of Beginning WIP		$                                  44,530.00
Cost incurred during the period		$                                832,150.00
Total Costs	Costs	$                                876,680.00
Equivalent units of production	EUP	81,200
Cost per EUP		$                                   10.79655

• [3]

Equivalent units of conversion = 18920 units

EUP - FIFO Method	Units	% Conversion	EUP - Conversion
Units of ENDING WIP	18,000	40.0%	7,200
Units STARTED & COMPLETED	11,000	100%	11,000
Units of beginning WIP	1,800	40%	720
Equivalent Units of Production			18,920

Cost per equivalent units = $ 43.98 {or $ 43.9826)

COST per EUP		Conversion
Cost incurred this period		$                  832,150.00
Total Costs	Costs	$                  832,150.00
Equivalent units of production	EUP	18,920
Cost per EUP		$                        43.9826