Carpenter Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were: A total of 7,800 units were started and 7,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
The ending inventory was 85% complete with respect to materials and 70% complete with respect to conversion costs.What are the equivalent units for conversion costs for the month in the first processing department?
A) 910
B) 8,010
C) 7,100
D) 8,400

Question

Carpenter Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were:  A total of 7,800 units were started and 7,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
 The ending inventory was 85% complete with respect to materials and 70% complete with respect to conversion costs.What are the equivalent units for conversion costs for the month in the first processing department?
A) 910 
B) 8,010 
C) 7,100 
D) 8,400

Quizplus · Accepted Answer

Equivalent units for conversion costs = Units transferred out + Equivalent units in ending inventory
Units transferred out = 7,100
Equivalent units in ending inventory = 
Conversion costs: 600 x 70% + (7,800 - 6,700) x 100% x 100% = 420 + 1,100 = 1,520
Total equivalent units for conversion costs = 7,100 + 1,520 = 8,620
Since the weighted-average method averages the percentage completion of beginning inventory with the percentage completion of units started during the period, the equivalent units for conversion costs will include both the beginning inventory (600 x 30%) and units started during the period (7,800 x 100%). The correct answer is B.

Carpenter Corporation Uses the Weighted-Average Method in Its Process Costing