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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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    Solution Preview

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

    Solution Summary

    Conversion costs are computed.