The following information is available for Department A for the month of January:
$\begin{array}{lcc}
& \underline{\text {Units}}&
\underline{\text{cost}} \
\text { Work in process, January } 1 \text { (70\% complete) } & 10,000 & \
\text { Direct materials } & & \$ 36,000 \
\text { Direct labour } & & 18,000 \
\text { Manufacturing overhead } & &\underline{ 24,000} \
\text { Total work in process, January } 1 & &\underline{ \$ 78,000 }\
\begin{array}{l}
\text { Started in production during January } \
\text { Costs added: }
\end{array} & 40,000 & \
\text { Direct materials } & & \$ 108,000 \
\text { Direct labour } & & 48,000 \
\text { Manufacturing overhead } & &\underline{ 60,600} \
\text { Total costs added during January } & & \underline{\$ 216,600 }\
\text { Work in process, January } 31 \text { ( } 80 \% \text { complete) }&4,000
\end{array}$ Materials are added at the beginning of the process.Round unit costs to two decimal places.
-Refer to the figure.What is the cost per equivalent unit of production for conversion using the weighted average method?
A)$2.19
B)$2.55
C)$3.06
D)$3.54

Question

The following information is available for Department A for the month of January:
$\begin{array}{lcc}
& \underline{\text {Units}}&
\underline{\text{cost}} \
\text { Work in process, January } 1 \text { (70\% complete) } & 10,000 & \
 \text { Direct materials } & & \$ 36,000 \
 \text { Direct labour } & & 18,000 \
\text { Manufacturing overhead } & &\underline{ 24,000} \
 \text { Total work in process, January } 1 & &\underline{ \$ 78,000 }\
 \begin{array}{l}
\text { Started in production during January } \
\text { Costs added: }
\end{array} & 40,000 & \
 \text { Direct materials } & & \$ 108,000 \
 \text { Direct labour } & & 48,000 \
 \text { Manufacturing overhead } & &\underline{ 60,600} \
\text { Total costs added during January } & & \underline{\$ 216,600 }\
\text { Work in process, January } 31 \text { ( } 80 \% \text { complete) }&4,000
\end{array}$ Materials are added at the beginning of the process.Round unit costs to two decimal places.
-Refer to the figure.What is the cost per equivalent unit of production for conversion using the weighted average method?
A)$2.19
B)$2.55
C)$3.06
D)$3.54

Quizplus · Accepted Answer

To calculate the cost per equivalent unit of production for conversion costs using the weighted average method, we first need to determine the total conversion costs and the equivalent units for conversion.1. Total conversion costs include direct labor and manufacturing overhead for both the beginning work in process and the costs added during January:   - Beginning WIP conversion costs: $18,000 (labor) + $24,000 (overhead) = $42,000   - Costs added during January: $48,000 (labor) + $60,600 (overhead) = $108,600   - Total conversion costs: $42,000 + $108,600 = $150,6002. Equivalent units for conversion:   - For the beginning WIP, 10,000 units were 70% complete, so the remaining 30% needs to be completed: 10,000 units * 30% = 3,000 equivalent units   - 40,000 units were started and completed during January, plus the 10,000 units from the beginning WIP, making it 50,000 units in total. However, we have 4,000 units 80% complete at the end of January, so we subtract the equivalent units for these: 4,000 units * 80% = 3,200 equivalent units for the ending WIP.   - Total equivalent units for conversion = 40,000 (started and completed) + 3,000 (from beginning WIP) + 3,200 (for ending WIP) = 46,200 equivalent units3. Cost per equivalent unit for conversion = Total conversion costs / Equivalent units for conversion   = $150,600 / 46,200 equivalent units = $3.06Therefore, the cost per equivalent unit of production for conversion using the weighted average method is $3.06.

The Following Information Is Available for Department a for the Month