ECONOMICS

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COST ACCOUNTING

PROCESS COSTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 90, 000 units were started into production in January; and there were 20, 000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January?
A
70, 000 equivalent units.
B
82, 000 equivalent units.
C
78, 000 equivalent units.
D
90, 000 equivalent units.
Explanation: 

Detailed explanation-1: -What were the equivalent units of production for materials for the month of January? 98, 000 equivalent units. Materials are added at the beginning of the process.

Detailed explanation-2: -Materials added at the beginning means 100% complete since it has received all its materials. Materials or conversion costs added evenly means use the percent complete given. Remember, conversion costs means direct labor and overhead.

Detailed explanation-3: -Materials are added at the beginning of a process in a process costing system. The beginning Work-in-Process Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for materials are: beginning inventory this period for this process.

Detailed explanation-4: -Equivalent units for a process costing system using the FIFO method would be equal to: a. units completed during the period, plus equivalent units in the ending work in process inventory.

There is 1 question to complete.
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