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# Conversion costs

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The Rainbow Paint Co. uses a process-costing system. Materials are added at the beginning of the process and conversion costs are incurred uniformly. Work in process at the beginning of the month is 40 % complete; at the end, 20%. One gallon of material makes one gallon of product. Data follows:

Beginning inventory 550 gal
Direct material added 7,150 gal
Ending inventory 400 gal
Conversion cost incurred \$35,724
Cost of direct materials added \$65,340
Conversion costs, beginning inventory \$1,914
Cost of direct materials, beginning inv. \$3,190

Use the weighted average method. Prepare a schedule of the output in equivalent units for materials and conversion costs.

Equivalent units of material_________________________-
Equivalent units of conversion costs__________________

What costs should be included in WIP for direct materials and conversion costs. [5 points] material___________________; conversion costs_____________-

Calculate the cost per equivalent unit [5 points]
Material__________________ conversion cost______________-

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https://brainmass.com/economics/pricing-output-decisions/conversion-costs-198093

#### Solution Preview

Equivalent units of material = begining inventory + material added + ending inventory
=550+7150=7700
Equivalent units of conversion costs =begining inventory + ...

#### Solution Summary

Conversion costs are computed.

\$2.49