Department A had 10,000 units in work in process that were 30% converted at the beginning of the period at a cost of $10,000. During the period, 15,000 units of direct materials were added at a cost of $60,000, 16,000 units were completed, and 9,000 units were 40% completed. The first in, first out method is used and all materials are added at the beginning of the process. Direct labor was $30,000, and factory overhead was $60,000 during the period.
1. What is the number of equivalent units of conversion for the perod? 12,600
2. What is the tontoal conversion costs for the period? $90,000
3. What was the conversion cost of the units started and completed during the period?
4. What was the converision cost of the 9,000 units in process at the end of the period?
To answer these questions, we need to understand the concept of equivalent units and conversion costs.
1. Equivalent units of conversion: Equivalent units refer to the number of partially completed units that could have been completed if all effort had been applied to them. In this case, 10,000 units were 30% completed at the beginning of the period, and 9,000 units were 40% completed at the end of the period. To calculate the equivalent units of conversion, we need to determine the number of units that are fully completed and the number of partially completed units.
The fully completed units can be calculated as the number of units completed during the period, which is 16,000 units.
The partially completed units can be calculated as the number of units in process at the beginning of the period multiplied by the percentage of completion, which is 10,000 units x 30% = 3,000 units.
Adding these two figures together gives us the total equivalent units of conversion: 16,000 units + 3,000 units = 19,000 units.
However, we need to adjust this number because some of the units in process at the end of the period were completed. 9,000 units were 40% completed, so the equivalent units of conversion for these units are 9,000 units x 40% = 3,600 units.
Finally, we can calculate the total equivalent units of conversion by subtracting the units that were completed from the adjusted total: 19,000 units - 3,600 units = 15,400 units.
2. Total conversion costs: Conversion costs refer to the costs incurred to convert raw materials into finished products. In this case, the conversion costs include direct labor costs and factory overhead costs. The direct labor cost for the period is given as $30,000, and the factory overhead cost is given as $60,000. To calculate the total conversion costs, simply add these two figures together: $30,000 + $60,000 = $90,000.
3. Conversion cost of units started and completed: To calculate the conversion cost of units started and completed, we need to multiply the number of units completed during the period by the conversion cost per unit. The conversion cost per unit can be calculated by dividing the total conversion costs by the total equivalent units of conversion.
In this case, the number of units completed is given as 16,000 units. The total conversion costs are given as $90,000, and the total equivalent units of conversion are calculated as 15,400 units (as determined in question 1).
Therefore, the conversion cost of units started and completed can be calculated as: (16,000 units / 15,400 units) x $90,000 = $93,506.49 (rounded to the nearest cent).
4. Conversion cost of units in process at the end of the period: To calculate the conversion cost of units in process at the end of the period, we need to multiply the number of units in process at the end of the period by the percentage of completion and the conversion cost per unit.
In this case, the number of units in process at the end of the period is given as 9,000 units. The percentage of completion is given as 40%. The conversion cost per unit can be calculated using the total conversion costs and the total equivalent units of conversion, as discussed in question 3.
Therefore, the conversion cost of the 9,000 units in process at the end of the period can be calculated as: 9,000 units x 40% x ($90,000 / 15,400 units) = $21,818.18 (rounded to the nearest cent).
I hope this helps clarify the calculations for the given questions!