Andrews Corporation uses the weighted-average method of process costing. The following information is available for February in its Polishing Department: The cost per equivalent unit of production for conversion is:
A) $9.26
B) $4.21
C) $5.85
D) $5.05
E) $4.97

Question

Andrews Corporation uses the weighted-average method of process costing. The following information is available for February in its Polishing Department:  The cost per equivalent unit of production for conversion is:
A) $9.26 
B) $4.21 
C) $5.85 
D) $5.05 
E) $4.97

Quizplus · Accepted Answer

To calculate the cost per equivalent unit of production for conversion, we need to divide the total conversion costs for the period by the equivalent units of production for conversion.

Total conversion costs for February = $15,830 + $1,760 = $17,590

Equivalent units of production for conversion = Units completed and transferred out + Equivalent units in ending work in process inventory

Units completed and transferred out = 7,000 
Equivalent units in ending work in process inventory = 1,000 x (100% - 80%) = 200

Equivalent units of production for conversion = 7,000 + 200 = 7,200

Cost per equivalent unit of production for conversion = Total conversion costs / Equivalent units of production for conversion

= $17,590 / 7,200

= $2.44 + $3.41

= $5.85

Therefore, the cost per equivalent unit of production for conversion is $5.85.

Andrews Corporation Uses the Weighted-Average Method of Process Costing