Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were: A total of 6,800 units were started and 6,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs.What are the equivalent units for conversion costs for the month in the first processing department?
A) 7,200
B) 6,925
C) 6,100
D) 825

Question

Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were:  A total of 6,800 units were started and 6,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
 The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs.What are the equivalent units for conversion costs for the month in the first processing department?
A) 7,200 
B) 6,925 
C) 6,100 
D) 825

Quizplus · Accepted Answer

Equivalent units for conversion costs = Units transferred out + Ending inventory (in terms of conversion costs) 
Units transferred out = 6,100 
Ending inventory as given is 75% complete with respect to conversion costs.

Therefore, equivalent units for conversion costs = 6,100 + (0.75 x 400) = 6,925 units.

Domingo Corporation Uses the Weighted-Average Method in Its Process Costing