Question

30. On March 1, Upton Company’s Packaging Department had work in process inventory of 8,820 units, which had been transferred in from the Finishing Department. These units had accumulated costs of $315,000 in previous departments and $16,000 for conversion costs in the Packaging Department. During March, 30,000 units were transferred into the department. These units had accumulated costs of $770,000 in the previous departments. The Packaging Department incurred $54,000 in conversion costs during the month. On March 31, 700 units remained in ending inventory. These units were 80% complete with respect to conversion costs. Compute the cost per equivalent unit for transferred-in costs and for conversion costs for the Packaging Department using the weighted average method.

Answer 1

Answer:

The cost per equivalent unit for transferred-in costs and for conversion costs for the Packaging Department using the weighted average method is $27.95 and $1.81 respectively

Explanation:

For computing the  cost per equivalent unit for transferred-in costs and for conversion costs, first, we have to compute the transferred out units which is shown below:

= Beginning work in process inventory units + units transferred - ending work in process inventory units

= 8,820 units + 30,000 units - 700 units

= 38,120 units

Now for transferred-in costs, the per equivalent cost equal to

= (Accumulated costs + accumulated costs) ÷ (transferred out units +  ending work in process inventory units)

= ($315,000 + $770,000) ÷ (38,120 units + 700 units)

= $27.95

For conversion costs , the per equivalent cost equal to

= (Accumulated costs + accumulated costs) ÷ (transferred out units +  ending work in process inventory units × completion percentage)

= ($16,000 + $54,000) ÷ (38,120 units + 700 units × 80%)

= $1.81