Sparky Corporation uses the weighted-average method of process costing.The following information is available for February in its Molding Department: Units:
Beginning Inventory: 25,000 units,100% complete as to materials and 55% complete as to conversion.
Units started and completed: 110,000.
Units completed and transferred out: 135,000.
Ending Inventory: 30,000 units,100% complete as to materials and 30% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $43,000.
Costs in beginning Work in Process - Conversion: $48,850.
Costs incurred in February - Direct Materials: $287,000.
Costs incurred in February - Conversion: $599,150.
-Calculate the equivalent units of conversion.
A)165,000
B)130,250
C)140,000
D)144,000
E)110,000

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of conversion for units started and completed and for ending inventory:

Equivalent units of conversion for units started and completed:
110,000 units x 100% = 110,000 equivalent units of conversion

Equivalent units of conversion for ending inventory:
30,000 units x 30% = 9,000 equivalent units of conversion

Total equivalent units of conversion: 
110,000 + 9,000 = 119,000 equivalent units of conversion

Since we are using the weighted-average method, we need to combine the beginning inventory and costs incurred in February.

Total costs in beginning Work in Process: 
Direct Materials: $43,000
Conversion: $48,850

Costs incurred in February: 
Direct Materials: $287,000
Conversion: $599,150

Total costs: 
Direct Materials: $43,000 + $287,000 = $330,000
Conversion: $48,850 + $599,150 = $648,000

To find the cost per equivalent unit of conversion, we divide the total conversion cost by the total equivalent units of conversion:

Cost per equivalent unit of conversion: 
$648,000 ÷ 119,000 = $5.46 per equivalent unit of conversion

Therefore, the answer is D) 144,000 equivalent units of conversion, which is calculated by adding the equivalent units of conversion for units started and completed and for ending inventory:

110,000 + 30,000 x 30% = 110,000 + 9,000 = 119,000 
The final answer is 144,000 equivalent units of conversion using weighted average method calculation.

Sparky Corporation Uses the Weighted-Average Method of Process Costing