Question

Plastic​ Molding, Inc. manufacturers plastic molding for automobiles.​ It’s costing system utilizes two cost​ categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production and conversion costs are allocated evenly throughout​ production:

Data for the Assembly Department for March 2007​ are:

​Work-in-Process, beginning​ inventory, 60% converted ​ 400 units

Units started during March ​ 2,000 units

​Work-in-Process, ending​ inventory, 40% converted ​ 200 units

1. What were the equivalent units for conversion costs assuming the weighted average costing is​ used?

2. What were the equivalent units for conversion costs assuming the​ first-in-first-out costing is​ used?

3. What were the equivalent units for direct materials assuming the weighted average costing is​ used?

Answer 1

Requirement 1

		Conversion
Equivalent Units of Production		2,280

Working

Reconciliation of Units
A	Opening WIP	400
B	Introduced	2,000
C=A+B	TOTAL	2,400
D	Transferred	2,200
E=C-D	Closing WIP	200

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	2,200			100%	2,200.0	100%	2,200
Closing WIP	200			100%	200.0	40%	80
Total	2,400			Total	2,400.0	Total	2,280

.

Requirement 2

		Conversion
Equivalent Units of Production		1,920

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	400	100%	90%	0%	10%
Units introduced	2,000
Total units to be accounted for	2,400
Completed and Transferred unit	2,200	0%	0%	100%	100%
Ending WIP	200	0%	0%	100%	40%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	400	0%	-	10%	40
From units started/Introduced	1,800	100%	1,800	100%	1,800
Total	2,200		1,800		1,840
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	200	100%	200	40%	80
Total EUP	2,400		2,000		1,920

.Requirement 3

	Material
Equivalent Units of Production	2,400