Question

Nebraska Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 25,000 units in its beginning work-in-process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $51,820. An additional 97,000 units were started into production during the month. There were 28,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $747,970 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month? (Round to three decimal places.)

a. $8.130.
b. $8.696.
c. $7.885.
d. $5.584

Answer 1

Answer:

Cost per equivalent unit for conversion costs for the month  = $8.262

Explanation:

The weighted average cost of valuation does not separate the opening inventory from the units newly introduced when accounting for completed units in a production period.

To determine the cost per equivalent units using Weighted Average Method, follow the steps below:

Step 1: Determine the equivalent Unit

Completed units = 25000+ 97000- 28000 = 94000

                                            Workings                 Equiva. Units

Completed units    94000       (94000 *100%)    =  94,000

Closing WIP            28000      (28,000 * 10%)  =     2,800

Total Equivalent units                                         96,800.00                    

Step 2 : calculate total conversion cost

= 51820+747970= 799,790.00

Step 3 = Cost per Equivalent unit per conversion cost

Cost per unit = Total conversion cost/total Equivalent units

                     = 799,790.00 / 96,800.00

                     = $8.262

Cost per equivalent unit for conversion costs for the month  = $8.262