Question

Kimbeth Manufacturing uses a process cost system to manufacture dust density sensors for the mining industry. The following information pertains to operations for the month of May. Units Beginning work‐in‐process inventory, May 1 16,000 Started in production during May 100,000 Completed production during May 92,000 Ending work‐in‐process inventory, May 31 24,000 The beginning inventory was 60% complete for materials and 20% complete for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs. Costs pertaining to the month of May are: Beginning inventory costs are: materials, $54,560; direct labor, $20,320; and factory overhead, $15,240. Costs incurred during May are: materials used, $468,000; direct labor, $182,880; and factory overhead, $391,160. Using the weighted‐average method, the equivalent unit conversion cost for May is:

Answer 1

Answer:

$6 per unit

Explanation:

using the weighted average method:

units completed 92,000 x 100% (both materials and conversion)

ending work in progress 24,000

• materials 90% completed = 21,600
• conversion 40% completed = 9,600

equivalent unit conversion costs = total conversion costs / total equivalent units of conversion

• total conversion costs = $20,320 + $15,240 + $$182,880 + $391,160 = $609,600
• total equivalent units of conversion = 92,000 + 9,600 = 101,600

equivalent unit conversion costs = $609,600 / 101,600 units = $6 per unit