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 at March 31 and the cost per equivalent unit for conversion costs is $6.00, how many units were completed and transferred out during March?

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for conversion costs:

7,000 units × 70% completion = 4,900 equivalent units

Then we can use the information given to solve for the total units completed and transferred out:

Total conversion cost for completed and transferred out units = Cost per equivalent unit × Equivalent units of production for conversion costs
Total conversion cost for completed and transferred out units = $6.00 × X
Total conversion cost for completed and transferred out units = $552,000 - (7,000 units × 100% completion × $6.00)
Total conversion cost for completed and transferred out units = $492,000
$6.00X = $492,000
X = 82,000 units

Therefore, the answer is C) 87,100 units. To get this answer, we need to add the 7,000 units from the beginning work in process inventory to the 82,000 units completed during the month to get a total of 89,000 units. However, we need to subtract the 1,900 units still in process at the end of the month (which are 70% complete with respect to conversion costs) to arrive at the total number of units completed and transferred out during the month:

89,000 units - 1,900 units = 87,100 units.

America Productions Uses a Process Costing System