Question

Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete.
The following data pertain to May:
Units Work in process, May 1 15,000
Units started during May 60,000
Units completed and transferred out 68,000
Work in process, May 31 7,000 Total
Direct Materials Conversion Costs
Costs: Work in process, May 1 $ 41,250 $ 16,500 $ 24,750 Costs incurred during May 234,630 72,000 162,630 Totals $ 275,880 $ 88,500 $ 187,380 Using the weighted-average method of process costing, the cost per unit of conversion activity is:________.
a. $2.50.
b. $2.53.
c. $2.70.
d. $2.76.

Answer 1

Answer:

$2.38

Explanation:

Note : I have uploaded the full question below as an image

Step 1

Calculate the Equivalent units of production with respect to conversion costs

Units Completed and Transferred (81,000 x 100%)    = 81,000

Plus Units in Ending Work In Process (9,000 x 20%) =    1,800

Total Equivalent Units                                                   = 82,800

Step 2

Calculate the Total Conversion Costs during the period

Total Conversion Costs = $197,380 (given)

Step 3

Calculate Cost per Equivalent Unit

Cost per Equivalent Unit = Total Cost ÷ Equivalent Units

                                         = $197,380 ÷ 82,800

                                         = $2.38