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:

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:

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 calculate the cost per equivalent unit for conversion costs, we need to divide the total conversion costs (beginning inventory + costs incurred during the month) by the equivalent units of production (EU). 
Total conversion costs = $68,064 + $585,324 = $653,388
Equivalent units of production = (4,500 x 100%) + (1,500 x 40%) = 4,900
Cost per EU for conversion = $653,388 / 4,900 EU = $6.892 (rounded to three decimal places) 
Therefore, the best choice is C with the calculated explanation.

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