Question

Thomas Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 10,000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,200. An additional 60,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $380,060 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?

Answer 1

Answer:

Cost per equivalent unit for conversion costs for the month = $6.21

Explanation:

The weighted average cost of valuation does not separate the opening inventory from the units newly introduced when accounting for completed units in a production period.

To determine the cost per equivalent units using Weighted Average Method, follow the steps below:

Step 1: Determine the equivalent Unit

Completed units = 10,000+  60,000-19000= 51000

Items                                      Workings            Equiva. Units

Completed units    51,000    (51000 *100%) =          51,000

Closing WIP            19,000     19,000 * 70%)          =  2,800

Total Equivalent units                                             64,300

Step 2 : calculate total conversion cost

= 19,200 + $380,060 = 399,260

Step 3 = Cost per Equivalent unit per conversion cost

Cost per unit = Total conversion cost/total Equivalent units

=399,260 /64,300

= $6.21

Cost per equivalent unit for conversion costs for the month = $6.21