Question

In: Accounting

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of...

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 72,000 chairs. During the month, the firm completed 77,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 11,000 chairs in ending inventory. There were 16,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.

Beginning inventory:
Direct materials $24,000 Conversion costs $35,000

Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000

What were the equivalent units for conversion costs during February?

Solutions

Expert Solution

Equivalent units for conversion cost = 81000

Working

STEP 1 (FIFO)
Reconciliation of Units
Units % already completed % completed this period
Conversion cost Conversion cost
Beginning WIP             16,000 30% 70%
Units introduced             72,000
Total units to be accounted for             88,000
Completed and Transferred unit             77,000 0% 100%
Ending WIP             11,000 0% 80%

.

STEP 2 (FIFO)
Equivalent Units
Total Units Conversion cost
Units Transferred: % completed this period Equivalent Units
From WIP             16,000 70%                        11,200
From units started/Introduced             61,000 100%                        61,000
Total             77,000                        72,200
Total Units Conversion cost
Ending WIP % completed this period Equivalent Units
Total             11,000 80%                          8,800
Total EUP             88,000                        81,000

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