Iowa Company uses a process costing system. Operating data for the first processing department for the...

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		15,000		30%
Started into production during June		75,000
Ending work-in-process inventory		20,000		70%

According to the company's records, the conversion cost in beginning work-in-process inventory was $49,920 at the beginning of June. Additional conversion costs of $855,120 were incurred in the department during the month.

1. How many units are transferred out?

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?

Solutions

Expert Solution

Iowa company
Weighted Average Method:
		Equivalent Units
		Conversion costs
	Whole units	%	Units
Opening WIP	15000
Started	75000
Total Units to account for	90000
Completed and tfd.( answer 1 )	70000	100	70000
Closing WIP	20000	70	14000
Total Units to account for	90000		84000	Answer 2

Cost Information

Costs to account for:	Conversion
Op. WIP	49920
Added during the period	855120
Unit costs	905040
EUP	84000
Cost per EUP	10.77428571	Answer 2

FIFO Method:

		Conversion costs
	Whole units	%	Units
Opening WIP	15000
Started	75000
Total Units to account for	90000
Opening WIP	15000	70	10500
Completed and tfd.	55000	100	55000
Closing WIP	20000	70	14000
Total Units to account for ( EUP)	90000		79500	Answer 3
Cost Information

Costs to account for:	Conversion
Op. WIP	49920
Added during the period	855120
Total costs to account for	905040
Cost per EUP :-
Cost to be accounted for	855120
EUP	79500
Cost per EUP	10.75622642	Answer 3

ekkarill92 answered 1 year ago

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