Question

Department F had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $13,400. Of the $13,400, $8,600 was for material and $4,800 was for conversion costs. 14,000 units of direct materials were added during the period at a cost of $25,300. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $33,000 and factory overhead was $20,000. If the average cost method is used, the conversion cost per unit (to the nearest cent) would be a.$3.35 b.$5.25 c.$3.21 d.$3.85

Answer 1

Answer:

a.$3.35

Explanation:

The first step in determining  conversion cost per unit is to calculate the Total Equivalent units of production for Conversion Costs.

Conversion Costs

Units Completed and transferred (15,000 × 100%) = 15,000

Units in Ending Work In Process (3,000 × 75%)      =  2,250

Total Equivalent units of production                        =  17,250

The next step is to determine the total conversion cost of production incurred during the period.

Conversion Costs

Conversion Costs in Beginning Work In Process                               $4,800

Conversion Costs added during the period ($33,000 + $20,000) $53,000

Total Conversion Costs                                                                      $57,800

Finally calculate the conversion cost per unit

Conversion cost per unit = Total Conversion Costs  / Total Equivalent units of production

                                         = $57,800 / 17,250

                                         = $3.35 (to the nearest cent)