Question
In: Accounting
The following information is available from the Oils Division of Glasgow Corporation for December. Conversion costs...
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 60 percent complete as to ending work-in-process inventory. Information about conversion costs follows.
| Units | Conversion Costs | |||||
| WIP at December 1 (80% complete) | 112,000 | $ | 443,520 | |||
| Units started and costs incurred during December | 552,000 | 2,628,480 | ||||
| Units completed and transferred to next department during December | 412,000 | ? | ||||
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?
Solutions
Expert Solution
a-1) WIP at December31 = Opening WIP + Units Started during the period - Units Completed & transfered
= 112000 + 552000 - 412000
= 252000 Units (60% Completed)
Equivalent Units = Actual Number Units in the process * Percentage of work Completed
Statement of Equivalent units for conversion costs (under FIFO)
|
Particulars |
Input Units |
Particulars |
Output units |
% Completion |
Equivalent Units |
|
Opening WIP |
112000 |
From Opening WIP |
112000 |
80% |
89600 |
|
Units Started |
552000 |
From Started |
300000 |
100% |
300000 |
|
Units Completed & Transferred to next department |
412000 |
||||
|
Closing WIP |
252000 |
60% |
151200 |
||
|
664000 |
664000 |
540800 |
a-2) Cost per Equivalent Units = Cost Incurred during December / Equivalent Units
= $ 2,628,480 / 540800 Units
= $ 4.86 approx.
a-3) Conversion cost of work-in-process inventory in the Oils Division at December 31
= Closing WIP Equivalent Units * Cost per Equivalent Units
= 151200 Units * $ 4.86
= $ 734,886
Cost of Units Completed and Tranferred to next Department = 412000 Units * Cost per Equivalent Unit @ $4.86
= $ 2,002,320
b) Conversion costs per equivalent unit produced last period
| Particulars | Units | % Completion | Equivalent Units(EU) | Cost ($) | Cost per EU ($) |
| Opening WIP | 112000 | 80% | 89600 | 4,43,520 | 4.95 |
Conversion costs per equivalent unit produced this period(December)
= Cost Incurred during December / Equivalent Units
= $ 2,628,480 / 540800 Units
= $ 4.86 approx.
ekkarill92 answered 1 year agoRelated Solutions
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The following information is available from the Oils Division of Glasgow Corporation for December. Conversion costs...
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Glasgow Corporation for December. Conversion costs for this
division were 75 percent complete as to beginning work-in-process
inventory and 50 percent complete as to ending work-in-process
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?
The Oils Division uses FIFO.
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2.
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 60 percent complete as to ending work-in-process
inventory. Information about conversion costs follows.
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