David Company uses the weighted-average method in its process costing system.The first processing department,the Welding Department,started the month with 20,000 units that were 80% complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $123,200.An additional 65,000 units were started into production during the month.There were 19,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs.A total of $389,250 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 off to three decimal places.)
A) $7.547.
B) $7.700.
C) $4.634.
D) $5.988.

Question

Quizplus · Accepted Answer

The equivalent units for conversion costs are calculated as follows:Beginning work-in-process inventory: 20,000 units x 80% = 16,000 equivalent unitsUnits started and completed during the month: 65,000 unitsEnding work-in-process inventory: 19,000 units x 10% = 1,900 equivalent unitsTotal equivalent units: 16,000 + 65,000 + 1,900 = 82,900 equivalent unitsThe cost per equivalent unit for conversion costs is calculated as follows:Total conversion costs incurred: $389,250Cost per equivalent unit: $389,250 / 82,900 equivalent units = $4.694Therefore, the correct answer is C) $4.634.

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