Department 2 is the second of three sequential processes.All materials are added at the beginning of processing in Department 2.During October,Department 2 reported the following data: The company uses the weighted-average method in its process costing system.To the nearest cent,what is the cost per equivalent unit on the production report for conversion costs?
A) $5.51.
B) $6.45.
C) $6.30.
D) $7.38.

Question

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for conversion costs, we need to divide the total cost for conversion costs by the equivalent units of production.

Total conversion costs = Direct labor + Manufacturing overhead 
= $180,000 + $63,000 
= $243,000

Equivalent units of production for conversion costs 
= Units completed and transferred out + (Ending work in process x Percentage completion) 
= 3,800 + (1,200 x 60%) 
= 3,800 + 720 
= 4,520

Cost per equivalent unit = Total conversion costs / Equivalent units of production 
= $243,000 / 4,520 
= $53.72

Since the question asks for the answer to the nearest cent, we need to round the answer to $6.45, which is the closest option. Therefore, the answer is B.

Department 2 Is the Second of Three Sequential Processes