Question

All materials in the Fabrication Department are added at the beginning of the production process. On July 1, the Fabrication Department had 30 canoes in process that were 20% complete with respect to conversion cost. On July 31, Fabrication had 20 canoes in process that were 40% complete with respect to conversion cost. During July, the Fabrication Department completed 88 canoes and transferred them to the Waterproofing Department.What are the Fabrication Department's equivalent units of production related to conversion costs for July

Answer 1

To calculate the equivalent units of production for conversion costs in July for the Fabrication Department, one must add the equivalent units from the beginning inventory, units completed and transferred out, and the ending inventory, resulting in 102 equivalent units.

Step-by-step explanation:

The calculation of the equivalent units of production for the Fabrication Department related to conversion costs for July accounts for units at different stages of completion at the beginning and end of the period as well as the units completed during the period.

Calculating the Equivalent Units

At the start of July, there were 30 canoes 20% complete; therefore, they had 20% of their conversion costs applied (30 canoes x 20% = 6 equivalent units). During July, 88 canoes were completed and transferred out; these are considered 100% complete with respect to conversion costs (88 canoes x 100% = 88 equivalent units). At the end of July, there were 20 canoes 40% complete, contributing to the equivalent units for conversion costs (20 canoes x 40% = 8 equivalent units).

The total equivalent units of production for conversion costs in the Fabrication Department for July would be the sum of these: 6 (beginning inventory) + 88 (completed units) + 8 (ending inventory) = 102 equivalent units.

Answer 2

Calculating equivalent units of production related to conversion costs:

Equivalent units of production = Units transferred to other department + Equivalent units in ending work in process

Equivalent units of production = 88 + (20*40%)

Equivalent units of production = 88 + 8

Equivalent units of production = 96

Therefore, the fabrication department's equivalent units of production related to conversion costs for July is 96 canoes