America Productions uses a process costing system. Its Belting Department's Work in Process inventory account at March 31 consists of 7,000 units that are 100% complete with respect to materials and 70% complete with respect to conversion costs. If the total conversion cost in the Work in Process inventory account is $552,000 and the cost per equivalent unit for conversion costs is $6.00, how many units were completed and transferred out?

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for conversion costs. Since the 7,000 units are 70% complete, the equivalent units for conversion costs are:

7,000 units x 0.70 = 4,900 equivalent units

Next, we can use the formula:

Cost per equivalent unit x Equivalent units completed and transferred out = Total cost for the period

We know the total cost for the period is $552,000 and the cost per equivalent unit for conversion costs is $6.00. Solving for the equivalent units completed and transferred out, we get:

$6.00 x Equivalent units completed and transferred out = $552,000
Equivalent units completed and transferred out = $552,000 / $6.00
Equivalent units completed and transferred out = 92,000 units

Therefore, the answer is C) 87,100 units.

America Productions Uses a Process Costing System