Iam confused regarding treatment of when materials are added in between. Plz if ne one can explain
Fact Pattern: Marlan Manufacturing produces a product that passes through two departments. The
units from the molding department are completed in the assembly department. The units are
completed in assembly by adding the remaining direct materials when the units are 60% complete
with respect to conversion costs. Conversion costs are added proportionately in assembly. The
production activity in the assembly department for the current month is presented as follows. Marlan
uses the FIFO (first-in, first-out) inventory method in its process cost system.
Beginning inventory units (25% complete with respect to conversion costs) 8,000
Units transferred in from the molding department during the month 42,000
Units to account for 50,000
Units completed and transferred to finished goods inventory 38,000
Ending inventory units (40% complete with respect to conversion costs) 12,000
Units accounted for 50,000
Question: 530 The equivalent units in Marlan’s assembly department for conversion costs for the current
month are
A. 34,800 units.
B. 40,800 units.
Answer (B) is correct.
The equivalent units for conversion costs equal total units to account for,
minus work done on beginning inventory, minus work not done on
ending inventory. Hence, the equivalent units for conversion costs equal
40,800 units [50,000 units – (25% × 8,000 units) – (60% × 12,000)
------------------------------
Mariam Adnan
Accountant
Manama
Bahrain
------------------------------