Question

Andrews Corporation uses a process costing system for manufacturing. The following information is available for the February in its Polishing Department:Equivalent units of production—direct materials 110,000 EUPEquivalent units of production—conversion 95,000 EUPCosts in beginning Work in Process—direct materials $49,000Costs in beginning Work in Process—conversion $36,000Costs incurred in February—direct materials $414,000Costs incurred in February—conversion
The cost per equivalent unit of production for conversion is:A. $9.26B. $4.21C. $5.85D. $5.05E. $4.97

Answer 1

Answer:

C. $5.85

Explanation:

The computation of the conversion cost per equivalent unit is shown below:

= (Costs in beginning Work in Process - conversion + Costs in beginning Work in Process—conversion) ÷ (Equivalent units of production -conversion)

= ($36,000 + $520,000) ÷ (95,000 units)

= ($556,000) ÷ (95,000 units)

= $5.85

Simply we divide the total conversion cost by the conversion equivalent units