Natraj Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department

Question

4 years ago

5

Natraj Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department

for the month of October appear below:Units % Complete for ConversionBeginning WIP Inventory 5,400 20%Transfers In during October 38,100 Completed / Transferred Out in October 37,800 Ending WIP Inventory 60%What were the equivalent units for conversion costs in the Lubricating Department in October?

Business

1 answer:

bazaltina [42] · Answer 1 · 2022-01-19T11:47:10+03:00

Answer: $41,520

Explanation;

Equivalent units of production are used when some goods have not been fully processed but costs need to be attached to them. The incomplete ones will be converted to complete goods depending on how far along the production process they are.

Equivalent units for conversion costs = Transfers out during October + Ending WIP * Percentage completion

= 37,800 + (5,700 * 60%)

= $41,520