Dickerson Company Uses a Process Costing System The Conversion Cost of the Beginning Inventory Was $6,500

question 94

Essay

Dickerson Company uses a process costing system. The following information relates to one month's activity in the company's Mixing Department.
$$\begin{array} { l r c } & &{ \text { Corversion } } \\& \text { Units } & \text { Percent Complete } \\\text { Beginning work-in-process inventory } & 10,000 & 20 \% \\\text { Units started } & 21,000 & \\\text { Units cornpleted and transferred out } & 26,000 & \\\text { Ending work-in-process irventory } & 5,000 & 80 \%\end{array}$$
The conversion cost of the beginning inventory was $6,500. During the month, $112,000 in additional conversion cost was incurred.
Required:
a. Assume that the company uses the FIFO method. Compute:
1. The equivalent units of production for conversion for the month.
2. The cost per equivalent unit for conversion for the month.
3. The total cost transferred out during the month.
4. The cost assigned to the ending work-in-process inventory.
b. Assume that the company uses the weighted-average cost method. Compute:
1. The equivalent units of production for conversion for the month.
2. The cost per equivalent unit for conversion for the month.
3. The total cost transferred out during the month.
4. The cost assigned to the ending work-in-process inventory.

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Definitions:

Pollution Abatement

The reduction or elimination of pollution to protect the environment, typically involving strategies and technologies to control emissions and contaminants.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Marginal Benefit

The additional satisfaction or utility derived by consuming or producing one more unit of a good or service.

Public Good

An item or service made available at no cost to everyone in society, delivered by public institutions, private organizations, or individuals without aiming for financial gain.