The Mixing Department is the first processing department in Sweet N' Plenty.The beginning Work in Process inventory had a value of $17,700 for conversion costs and additional conversion costs of $214,000 were incurred by the department during the month.There were 2,000 units in ending Work in Process inventory that were 10% complete and 66,000 units were transferred out of the department during the month.The company uses process costing.What is the cost per equivalent unit for conversion costs?
A)$3.50
B)$34.07
C)$3.41
D)There is not enough information to answer the question

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated by adding the beginning Work in Process conversion costs to the conversion costs incurred during the month, and then dividing by the equivalent units for conversion costs. The beginning conversion costs are $17,700, and the additional conversion costs are $214,000, totaling $231,700. The equivalent units for conversion costs are the units transferred out plus the equivalent units in ending Work in Process inventory. The units transferred out are fully complete, so they count as 66,000 equivalent units. The ending Work in Process inventory is 2,000 units that are 10% complete, so they count as 200 equivalent units (2,000 units * 10%). Therefore, the total equivalent units for conversion costs are 66,200 (66,000 + 200). The cost per equivalent unit for conversion costs is $231,700 / 66,200 = $3.50.

The Mixing Department Is the First Processing Department in Sweet