Question

ABC Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.
Units Percent Complete with
Respect to Conversion
Beginning work in process inventory 5,100 70%
Transferred in from the prior department
during January 59,000
Completed and transferred to the next
department during January 56,800
Ending work in process inventory 7,300 40%
The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:____.
A) $7.00.
B) $7.50.
C) $7.65.
D) $8.00.

Answer 1

Answer:

$9.94

Explanation:

Equivalent unit of conversion cost = 56,800 + (7,300*40%)

Equivalent unit of conversion cost = 56,800 + 2,920

Equivalent unit of conversion cost = 59,720 unit

Total cost of conversion = $34,558 + $559,254

Total cost of conversion = $593,812

Cost per equivalent unit of conversion = Total cost of conversion / Equivalent unit of conversion cost

Cost per equivalent unit of conversion = $593,812 / 59,720 units

Cost per equivalent unit of conversion = $9.9432686

Cost per equivalent unit of conversion = $9.94