Fabian Company uses the weighted-average method in its process costing system.The Assembly Department started the month with 9,000 units in its beginning work-in-process inventory that were 70% complete with respect to conversion costs.During the month,an additional 90,000 units were transferred in from the prior department to begin processing in the Assembly Department.During the month,87,000 units were completed in the Assembly Department and transferred to the next processing department.There were 12,000 units in the ending work-in-process inventory of the Assembly Department that were 20% complete with respect to conversion costs.
What were the equivalent units of production for conversion costs in the Assembly Department for the month?
A) 93,000 units.
B) 83,100 units.
C) 87,000 units.
D) 89,400 units.

Question

Quizplus · Accepted Answer

The equivalent units of production for conversion costs are calculated by adding the units completed and transferred out to the equivalent units in ending work-in-process inventory for conversion costs. The calculation is as follows: Units completed and transferred out = 87,000 units (these are 100% complete for conversion costs).Equivalent units in ending work-in-process inventory = 12,000 units * 20% = 2,400 units.Units from beginning inventory were already 70% complete, and since we use the weighted-average method, we consider the degree of completion of beginning inventory in the total calculation. However, for conversion costs, we focus on the work done during the current period, so the beginning inventory's state of completion affects the calculation only in terms of what additional work is needed to complete those units, not as a direct addition to the equivalent units calculation.Therefore, equivalent units for conversion costs = 87,000 (completed and transferred out) + 2,400 (from ending WIP) = 89,400 units.

Fabian Company Uses the Weighted-Average Method in Its Process Costing