Reference no: EM133088115
Question - Epsilon Co. manufactures a product that is processed through two departments. The following information was obtained for the first department in January:
All direct materials are added at the beginning of the process, while conversion costs are added evenly throughout the process.
Inspection takes place when the units are 40% complete. Normal spoilage is considered to be 2% of good units passing inspection in the period. All spoiled units are discarded.
Beginning work-in-process (WIP) consisted of 100,000 units, 45% complete with respect to conversion costs.
Costs in beginning inventory included direct materials of $122,750 and conversion costs of $200,920.
There were 247,500 units started during the month, and costs added to production during the month totalled $303,800 for direct materials and $497,200 in conversion costs.
A total of 250,000 units were transferred to
Q1. Based on the above information, and assuming Epsilon uses the first in, first out (FIFO) method for process costing, what were the equivalent units for direct materials and conversion costs, respectively, for January?
a) 243,900 for direct materials; 223,780 for conversion costs
b) 244,500 for direct materials; 224,020 for conversion costs
c) 247,500 for direct materials; 224,980 for conversion costs
d) 247,500 for direct materials; 225,220 for conversion costs
Q2. Assume that Epsilon uses the weighted average method for process costing and that the equivalent units have been correctly calculated as 347,500 for direct materials and 270,220 for conversion. What is the total cost of the good units transferred to the second department for January? (Use four decimal places for the equivalent unit cost calculations.)
a) $952,750
b) $959,533
c) $960,890
d) $964,183
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