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the swivel chair company manufacturers a standard recliner. during february, the firm's assembly department started production of 145,000 chairs. during the month, the firm completed 175,000 chairs and transferred them to the finishing department. the firm ended the month with 18,000 chairs in ending inventory. all direct materials costs are added at the beginning of the production cycle. weighted-average costing is used by swivel. what were the equivalent units for conversion costs for february if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 40% complete as to conversion costs?

Respuesta :

The equivalent units for conversion costs for February is $193,000 chairs.

What are conversion costs?

Conversion costs are the production expenses needed to transform raw materials into finished goods. To determine the value of ending inventory, which is then reported in the balance sheet, the concept is used in cost accounting. The incremental cost of producing a good can also be calculated using it, which could be helpful for pricing decisions. In order for the producer to at least break even on the costs related to the product, the component costs and conversion costs of a product, when added together, represent lower threshold price at which product should be sold. All manufacturing expenses, excluding the cost of raw materials, are therefore conversion costs.

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