Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:
A) $9.479
B) $9.943
C) $9.680
D) $8.435

Question

Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.  The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:
A) $9.479 
B) $9.943 
C) $9.680 
D) $8.435

Quizplus · Accepted Answer

To find the cost per equivalent unit for conversion costs, we need to divide the total conversion costs for January ($559,254) by the total equivalent units produced in January (57,900).

Total equivalent units = Units completed and transferred out + equivalent units in ending work in process inventory 
Units completed and transferred out = 56,000 
Equivalent units in ending work in process inventory = (5,000 x 40% + 2,900 x 60%) = 2,480

Total equivalent units = 56,000 + 2,480 = 57,480

Cost per equivalent unit for conversion costs = $559,254 / 57,480 = $9.743

Rounding to the nearest cent, the cost per equivalent unit for conversion costs for January in the Molding Department is closest to $9.943, which is answer choice B.

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