D which costing method absorption costing or variable

(d) Which costing method, absorption costing or variable costing, is more appropriate for the
purpose of performance evaluation? Why?
(4 marks)

SMU Classification: Restricted
18. YWC Corporation manufactures a small travelling alarm clock using a two-department process.
The two departments are the Assembly and Finishing Departments. The Assembly Department
assembles the inner part of the clocks and transfers the parts to the Finishing Department.
Once the inner part units have been transferred from the Assembly Department into the Finishing
Department, Direct material X is added at the beginning of the process. Direct Material Y is added
when the process is 70% complete. Conversion costs are applied uniformly throughout the process.
The weighted-average method of process costing is used. Information for the Finishing Department
for the month of April is as follows:
Work in process inventory on 1 April:
Number of units (65% complete) 14,000
Transferred-in costs $35,000
Direct material X $11,200
Conversion costs $24,570
Units transferred-in from Assembly Department during April:
Number of units 45,000
Transferred-in costs $112,500
Units completed during April 42,000
Costs added during April:
Direct material X $36,000
Direct material Y $29,400
Conversion costs $109,485
Work in process inventory on 30 April:
Number of units (45% complete) 17,000
Required:
For April and with respect to the Finishing Department,
(a) Compute the equivalent units (EU) for Direct Material Y.
(2 marks)
(b) Compute the equivalent units (EU) for Conversion Cost.
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