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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Equivalent units of conversion costs

The Rolling Department of Keystone Steel Company had 400 tons in beginning work in process inventory (20% complete). During the period, 7,900 tons were completed. The ending work in process inventory was 1,000 tons (30% complete). What are the total equivalent units for conversion costs?

To determine

Process costs

It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.

Equivalents units for production

The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.

To Calculate: total equivalent units for conversion cost of Company KS.

Explanation

Calculate total equivalent units for conversion cost of Company KS as shown below:

Particulars Whole units (A) Percent Conversion Added in period (B) Equivalents units of Materials (A×B)
Inventory in process, July 1 400 80%  320
Add: Started and completed during July (1) 7,500 100%  7,500
Transferred out of Rolling (Completed) 7,900  7,820
Add: Inventory in process, July 31 1,000 30%  300
Total units to be assigned costs 8,900  8,120

Table (1)

Working note:

Units started and completed 

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