Information about units processed and processing costs incurred during a recent month in the Refining Department of a manufacturing company follow: The beginning work in process inventory included $11,000 of conversion cost. During the month, the Department incurred an additional $290,000 in conversion costs. Assuming that the company uses the FIFO method, what are the equivalent units for conversion costs for the Blending Department for the month?
A)119,100
B)111,950
C)115,250
D)114,000

Question

Information about units processed and processing costs incurred during a recent month in the Refining Department of a manufacturing company follow:  The beginning work in process inventory included $11,000 of conversion cost. During the month, the Department incurred an additional $290,000 in conversion costs. Assuming that the company uses the FIFO method, what are the equivalent units for conversion costs for the Blending Department for the month?
A)119,100 
B)111,950 
C)115,250 
D)114,000

Quizplus · Accepted Answer

To calculate the equivalent units for conversion costs, we need to add up the units that are fully processed and the equivalent units of units that are partially complete. For the blending department, we have:

Units fully processed: 65,000
Units partially complete: 30,000 x 100% + 25,000 x 40% = 30,000 + 10,000 = 40,000

Total equivalent units: 65,000 + 40,000 = 105,000

To calculate the total conversion costs per equivalent unit, we need to divide the total conversion costs by the total equivalent units:

Total conversion costs: $11,000 + $290,000 = $301,000
Total equivalent units: 105,000

Conversion costs per equivalent unit: $301,000 / 105,000 = $2.867 per equivalent unit

Finally, to calculate the equivalent units for conversion costs, we need to multiply the total equivalent units by the percentage of completion of the beginning work in process inventory:

Equivalent units for conversion costs: 105,000 x 110% = 115,500

The closest answer option is C) 115,250.

Information About Units Processed and Processing Costs Incurred During a Recent