David Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $123,200. An additional 65,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $389,250 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
A)$7.547
B)$7.700
C)$4.634
D)$5.988

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated as follows:Equivalent units = Beginning work in process units + Units started and completed + Ending work in process unitsEquivalent units = 20,000 units x 80% + 65,000 units + 19,000 units x 10%Equivalent units = 20,000 units x 0.80 + 65,000 units + 19,000 units x 0.10Equivalent units = 16,000 units + 65,000 units + 1,900 unitsEquivalent units = 82,900 unitsCost per equivalent unit = Total conversion costs / Equivalent unitsCost per equivalent unit = $389,250 / 82,900 unitsCost per equivalent unit = $4.698 (rounded to three decimal places)

David Corporation Uses the Weighted-Average Method in Its Process Costing