Carrington Corporation produces canned vegetable soup. The company uses the weighted-average method in its process costing system. The company sold 300,000 units in January. Data concerning inventories follow: What were the equivalent units for conversion costs for January?

Question

Carrington Corporation produces canned vegetable soup. The company uses the weighted-average method in its process costing system. The company sold 300,000 units in January. Data concerning inventories follow:  What were the equivalent units for conversion costs for January?

Quizplus · Accepted Answer

The weighted-average method calculates equivalent units by considering both units completed during the current period and units in ending work in process inventory. For conversion costs, the equivalent units are calculated as:

Equivalent Units for Conversion Costs = Units completed and transferred out + Equivalent units in ending work in process inventory

Units completed and transferred out = 300,000 units (given in the question)
Equivalent units in ending work in process inventory = (20% complete for conversion costs) x (50,000 units in ending work in process inventory) = 10,000 units

Therefore,

Equivalent Units for Conversion Costs = Units completed and transferred out + Equivalent units in ending work in process inventory
= 300,000 units + 10,000 units
= 310,000 units

However, since the question is asking for equivalent units for conversion costs, we need to subtract the equivalent units for direct materials from the total equivalent units calculated above:

Equivalent Units for Conversion Costs = Total Equivalent Units - Equivalent units for direct materials
= 310,000 units - 7,000 units (given in the question)
= 303,000 units

Therefore, the answer is B (303,000 units).

Carrington Corporation Produces Canned Vegetable Soup