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Tice following Information Is available from the Oils Division of Glasgow Corpora
Tice following Information Is available from the Oils Division of Glasgow Corpora. for December. Conversion costs for this division were 75% complete as to beginning work-In-process inventory and 50 percent complete as to ending work-In-prose Inventory. Information about conversion costs follows:
Units Conversion cost
WIP at December 1 (75% complete) 111,000 $389,610
Units started and costs incumed during December 551,000 2,492,875
Units completed ad transferred to next department 411,000 ?
during December
The Oils Division uses FIFO
Required:
a-1) Compute the equivalent units for conversion oasts.
a-2) Compute the cost per equivalent unit for conversion costs. (Round your answers to 2 decimal places.)
a-3) What was the conversion cost of work-In-process Inventory in the Oils Division at December 31 (Do not round Intermediate calculations.)
a-4) What were the coversion costs per equivalent unti last period and this period. (Do not round Intermediate calculations. Round your answers to 2 decimal places.)
Expert Solution
a-1) Computation of the equivalent units for conversion costs:-
Ending work in process = ((111,000 + 551,000 - 411,000)*50%)
= 251,000 * 50%
= 125,500
Equivalent units = Beginning work in process + Work completed during the period + Ending work in process
= (111,000*25%) + (411,000 - 111,000) + 125,500
= 27,750 + 300,000 + 125,500
= 453,250
a-2) Computation of the cost per equivalent unit for conversion costs:-
Cost per equivalent unit = Conversion cost / Equivalent units
= $2,492,875 / 453,250
= $5.50 per unit
a-3) Computation of the cost of ending work in process inventory:-
Cost of ending work in process inventory = Equivalent units * Cost per equivalent units
= 125,500 * $5.50
= $690,250
a-4) Computation of the cost per equivalent unit for previous period:-
Cost per equivalent unit = Conversion cost / Equivalent units
= $389,610 / (111,000 * 75%)
= $389,610 / 83,250
= $4.68 per unit
Computation of the cost per equivalent unit for current period:-
Cost per equivalent unit = Conversion cost / Equivalent units
= $2,492,875 / 453,250
= $5.50 per unit
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