Question

A production department’s beginning inventory cost includes $478,000 of conversion costs. This department incurs an additional $1,047,500 in conversion costs in the month of March. Equivalent units of production for conversion total 770,000 for March.Required:Calculate the cost per equivalent unit of conversion using the weighted-average method.

Answer 1

Answer: $1.98

Explanation:

Equivalent Units of Production are used when the manufacturers have not completely finished their products for the year. This helps them express it in terms of fully manufactured units.

Using the weighted average method, the cost per equivalent unit is;

= $\frac{Beginning inventory cost + Cost of current production}{Equivalent units of production}$

= $\frac{478,000 + 1,047,500}{770,000}$

= $1.98