Logan, Inc., had 9,000 units of work in process in Department M on March 1 that

ID: 2422808 • Letter: L

Question

Logan, Inc., had 9,000 units of work in process in Department M on March 1 that were 50 percent complete as to conversion costs. Materials are introduced at the beginning of the process. During March, 18,000 units were started, 20,000 units were completed, and there were 1,000 units of normal losses. Logan had 6,000 units of work in process at March 31 that were 60 percent complete as to conversion costs. Under Logan's cost accounting system, lost units reduce the number of units over which total cost can be spread. Using the average cost method, what were the equivalent units for March for conversion costs?

Explanation / Answer

Calculation of equivalent units for March for conversion costs:

(Using the average cost method)

Units in beginning Work in Process

9000

Units started during March

18000

Units Completed in March

20000

Units started and Completed in March (20000-9000)

11000

Units in ending work in process = 6000 * 60% =

3600

Equivalent units for March for conversion costs = (11000+3600)

14600