Nebraska Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work-in-process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $44,820. An additional 90,000 units were started into production during the month. There were 21,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $677,970 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 your answer to 3 decimal places.)
A) $8.112.
B) $8.300.
C) $7.533.
D) $6.108.

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated by dividing the total conversion costs incurred during the month by the total equivalent units of production. The total equivalent units of production is calculated by adding the equivalent units of production from the beginning work-in-process inventory to the equivalent units of production from the units started and completed during the month. The equivalent units of production from the beginning work-in-process inventory is calculated by multiplying the number of units in the beginning work-in-process inventory by the percentage of completion with respect to conversion costs. The equivalent units of production from the units started and completed during the month is calculated by multiplying the number of units started and completed during the month by 100%. In this case, the total equivalent units of production is 108,000 (18,000 units x 30% + 90,000 units x 100%). The cost per equivalent unit for conversion costs is $677,970 / 108,000 units = $8.112.

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