Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 1,900 units. The costs and percentage completion of these units in beginning inventory were: A total of 8,300 units were started and 7,600 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) 10,200
B) 9,550
C) 7,600
D) 1,950

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 1,900 units. The costs and percentage completion of these units in beginning inventory were:  A total of 8,300 units were started and 7,600 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) 10,200 
B) 9,550 
C) 7,600 
D) 1,950

Quizplus · Accepted Answer

To calculate the equivalent units for conversion costs, we need to first calculate the percentage completion of units in ending inventory with respect to conversion costs.

For conversion costs: 
Equivalent units = Units in ending inventory × Percentage completion 
Equivalent units = 800 × 75% 
Equivalent units = 600

Now, we need to add the equivalent units of conversion costs for the units completed during the month:

Equivalent units = Units completed × Percentage completion 
Equivalent units = 7,600 × 100% 
Equivalent units = 7,600

Total equivalent units for conversion costs = 600 + 7,600 = 9,200

Therefore, the best choice is B (9,550) which is the closest option to 9,200.

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