Question 1. Why are equivalent units of production used in process costing?
Question 2:
Baum Co. has two processing departments: F...
Baum Co. has two processing departments: Fabrication and Assembly. In the Fabrication Department, metal is cut and formed into various components, which are then transferred to Assembly. The
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Baum Co. has two processing departments: Fabrication and Assembly. In the Fabrication Department, metal is cut and formed into various components, which are then transferred to Assembly. The components are welded, polished, and coated with sealant in the Assembly Department. April 2010 production data for these two departments follow.
Fabrication
Beginning WIP Inventory (100% complete as to material; ......... 5,000
25% complete as to conversion)
Units started during month ...........................................40,000
Ending WIP Inventory (100% complete as to material; ............ 6,800
60% complete as to conversion)
Assembly
Beginning WIP Inventory (0% complete as to sealant; ............... 2,000
35% complete as to conversion)
Units started during month................................................. ?
Ending WIP Inventory (0% complete as to sealant; ................... 6,100
15% complete as to conversion)
a. Determine the equivalent units of production for each cost component for each department under the WA method.
b. Determine the equivalent units of production for each cost component for each department under the FIFO method.