Larner Company uses the weighted-average method in its process costing system.Operating data for the first processing department for the month of June appear below:
$$\begin{array} { | l | r | r | }
\hline & \text { Units } & \text { Percentage complet } \
\hline \begin{array} { l }
\text { Beginning work in process } \
\text { inventory }
\end{array} & 24,000 & 40 \% \
\hline \begin{array} { l }
\text { Started into production } \
\text { during June }
\end{array} & 86,000 & \
\hline \begin{array} { l }
\text { Ending work in process } \
\text { inventory }
\end{array} & 19,000 & 20 \% \
\hline
\end{array}$$
According to the company's records,the conversion cost in beginning work-in-process inventory was $68,064 at the beginning of June.Additional conversion costs of $585,324 were incurred in the department during the month.
What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
A) $5.575.
B) $6.174.
C) $6.892.
D) $7.090.

Question

Larner Company uses the weighted-average method in its process costing system.Operating data for the first processing department for the month of June appear below:
$$\begin{array} { | l | r | r | } 
\hline & \text { Units } & \text { Percentage complet } \
\hline \begin{array} { l } 
\text { Beginning work in process } \
\text { inventory }
\end{array} & 24,000 & 40 \% \
\hline \begin{array} { l } 
\text { Started into production } \
\text { during June }
\end{array} & 86,000 & \
\hline \begin{array} { l } 
\text { Ending work in process } \
\text { inventory }
\end{array} & 19,000 & 20 \% \
\hline
\end{array}$$
According to the company's records,the conversion cost in beginning work-in-process inventory was $68,064 at the beginning of June.Additional conversion costs of $585,324 were incurred in the department during the month.
What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
A) $5.575.
B) $6.174.
C) $6.892.
D) $7.090.

Quizplus · Accepted Answer

To find the cost per equivalent unit for conversion costs, we add the conversion costs in beginning work-in-process inventory ($68,064) to the conversion costs incurred during the month ($585,324) for a total conversion cost of $653,388. We then divide this total conversion cost by the equivalent units of production for conversion costs (60,000 + 17,000 + 5,000 = 82,000), resulting in a cost per equivalent unit of $7.964. Rounded off to three decimal places, the cost per equivalent unit is $6.174, which is option B.

Larner Company Uses the Weighted-Average Method in Its Process Costing