Question

Hammoudi Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 16,000 units in its beginning work in process inventory that were 90% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $61,920. An additional 53,000 units were started into production during the month and 45,000 units were completed in the Welding Department and transferred to the next processing department. There were 24,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $194,340 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 off to three decimal places.) Select one: a. $4.300 b. $4.147 c. $2.524 d. $3.667

Answer 1

Answer:

b. $4.147

Explanation:

The First Step is to Determine the Total Equivalent Units of Production for Conversion Costs.

Units Completed and Transferred (45,000 × 100%) = 45,000

Units of Closing Work In Process (24,000 × 70% )   = 16,800

Total Equivalent Units of Production                         = 61,800

The Next Step is to Determine the Total Cost for Conversion during the Period.

Costs in Opening Work In Process   =     $61,920

Cost Added During the Year             =   $194,340

Total Cost for Conversion                  =  $256,260

Lastly, we Determine the cost per equivalent unit of Conversion Costs.

Cost per equivalent unit = Total Cost / Total Equivalent Units

                                        = $256,260 / 61,800

                                        = $4.146601942

                                        = $4.147 (three decimal places.)

Conclusion :

Therefore, the cost per equivalent unit for conversion costs for the month is  $4.147.