The following pertains to the Cereal Division of McKenzie Corporation. Conversio

Question

The following pertains to the Cereal Division of McKenzie Corporation. Conversion costs for this division were 80 percent complete as to beginning work in-process inventory and 50 percent complete as to ending work in-process inventory. Information about conversion costs for July is as follows Conv Units 116,000 $ 459360 556,000 2,594,400 416,000 Costs WIP at July 1 (80% complete) Units started and costs incurred during July Units completed and transferred to next department during July The Cereal Division uses FIFO Required (a) What was the conversion cost of work-in-process inventory in the Cereal Division at July 31? (Do not round your intermediate calculations.) onversion cost

Explanation / Answer

Physical Units Equivalent Units Conversion Costs Flow of Units Units to be acounted for In work-in-process inventory beginning 116000 Units Started This period 556000 Total Units to accounts for 672000 Units accounted for Complete and Transferred out From the beginning Work in Process 116000 116000 Started and Completed 300000 300000 Total Completed and Transferred out 416000 416000 Work In Process Ending Inventory 256000 128000 Total Units Accounted for 672000 544000 Less Work from Beginning Work in Process 116000 92800 Net Work Done in July 556000 451200 Costs Conversion Flow of Cost Costs to be Accounted for Work in Process Inventory Beginning 459360 Current Cost 2594400 Total Cost to be Accounted for 3053760 Costs Per Equivalent Unit 6.77 Costs Accounted for Costs Assigned to Units Transferred Out Costs from Beginning Inventory 459360 Current costs to complete beginnig Inventory 157064 Total Costs From Beginning Inventory 616424 Current costs of units Started and completed 3764120 Total Costs Transferred Out 4380544 Costs Assigned to Closing Work in Process Invetory 866560 The Answer for (a) is $866560 Answer for (b) Conversion Cost per Equivalent Units Previous Period $4.95 ($459360/92800) Conversion Cost per Equivalent Units Current Period $6.77

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