Fiero Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent units for the year total:

a) materials, 70,000; conversion, 70,000.

b) materials, 70,000; conversion, 2,400.

c) materials, 72,400; conversion, 72,400.

d) materials, 82,000; conversion, 72,400.

e) materials, 82,000; conversion, 82,000.

Question

Business

Edgar Odonnell

6 June, 02:20

Fiero Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent units for the year total:

a) materials, 70,000; conversion, 70,000.

b) materials, 70,000; conversion, 2,400.

c) materials, 72,400; conversion, 72,400.

d) materials, 82,000; conversion, 72,400.

e) materials, 82,000; conversion, 82,000.

+1

Answers (1)

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Benny · Answer 1

d) materials, 82,000; conversion, 72,400.

Explanation:

The computation of conversion cost is shown below:-

Material of Equivalent Units = Completed units during the year * 100% + Units in process at year end * 100%

= 70,000 * 100% + 12,000 * 100%

= 82,000 units

Conversion of Equivalent Units = Completed units during the year * 100% + Units in process at year end * Conversion cost percentage

= 70,000 * 100% + 12,000 * 20%

= 72,400 units