Ramos Corp. uses a process costing system to assign costs to its steel productio
ID: 2368469 • Letter: R
Question
Ramos Corp. uses a process costing system to assign costs to its steel production. During March 2013, Ramos had beginning Work in Process Inventory of 180,000 tons of steel (100 percent complete as to material and 65 percent complete as to conversion). During the month, the raw material needed to produce 3,400,000 tons of steel was started in process. At month-end, 165,000 tons remained in WIP Inventory (100 percent complete as to material and 40 percent complete as to conversion). a) Compute the total units to account for. b) Determine how many units were started and completed. c) Determine the equivalent units of production using the weighted average method. d) Determine the equivalent units of production using the FIFO method. e) Reconcile your answers to parts (c) and (d).Explanation / Answer
After materials, labor and overhead costs have been accumulated in a department, the department's output must be determined so that unit cost can be computed. A department usually has some partially completed units in its ending inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units when counting the department's out put. These partially converted units are mathematically converted into an equivalent number of fully completed units. In process costing this is done by using the following formula:
Equivalent Units = Number of partially Completed Units
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