Question

Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 19,600 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $20,200. An additional 92,000 units were started into production during the month. There were 25,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $844,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:
a. $8.486b. $9.965c. $8.738d. $9.200

Answer 1

Answer:

The answer is: The conversion cost per equivalent unit is closest to:           A) $8.486

Explanation:

We first have to determine the number of equivalent units that the welding department processed.

• started with 19,600 units at 10%, so they needed 90% of work to be finished. This is equivalent to 17,640 units processed (= 19,600 x 90%)
• 92,000 new units entered the welding process but only 67,000 units were finished by the end of the month.
• 25,000 units were only 70% complete which is equivalent to 17,500 units processed

So the total number of equivalent units processed during that month by the welding department was 17,640 + 67,000 + 17,500 = 102,140 units

The total conversion costs for the month were $844,880, so the conversion cost per equivalent unit is $8.27.