Reid Company uses a process costing system in which units go through several departments. In the Cutting Department for June, units in the beginning work-in-process inventory were 80% complete with respect to conversion costs. Units in the ending work-in-process inventory were 25% complete with respect to conversion costs. Other data for the department for June are as follows:
$\begin{array} { l | r | r | }
\hline & \text { Units } & \text { Conversion costs } \
\hline \begin{array} { l }
\text { Work in process inventory } \
\text { on June 1 }
\end{array} & 15,000 & \$ 50,200 \
\hline \begin{array} { l }
\text { Units started into } \
\text { production }
\end{array} & 145,000 \
\hline \begin{array} { l }
\text { Conversion costs incurred } \
\text { during June }
\end{array} & & \$ 175,700 \
\hline \begin{array} { l }
\text { Units completed and } \
\text { transferred to the next } \
\text { department during June }
\end{array} & 130,000 & \
\hline
\end{array}$

-Assuming that the company uses the weighted-average method,what is the cost per equivalent unit for conversion costs for June,rounded to the nearest cent?
A) $1.64.
B) $1.56.
C) $1.74.
D) $1.48.

Question

Reid Company uses a process costing system in which units go through several departments. In the Cutting Department for June, units in the beginning work-in-process inventory were 80% complete with respect to conversion costs. Units in the ending work-in-process inventory were 25% complete with respect to conversion costs. Other data for the department for June are as follows:
$\begin{array} { l | r | r | } 
\hline & \text { Units } & \text { Conversion costs } \
\hline \begin{array} { l } 
\text { Work in process inventory } \
\text { on June 1 }
\end{array} & 15,000 & \$ 50,200 \
\hline \begin{array} { l } 
\text { Units started into } \
\text { production }
\end{array} & 145,000  \
\hline \begin{array} { l } 
\text { Conversion costs incurred } \
\text { during June }
\end{array} & & \$ 175,700 \
\hline \begin{array} { l } 
\text { Units completed and } \
\text { transferred to the next } \
\text { department during June }
\end{array} & 130,000 & \
\hline
\end{array}$

-Assuming that the company uses the weighted-average method,what is the cost per equivalent unit for conversion costs for June,rounded to the nearest cent?
A) $1.64.
B) $1.56.
C) $1.74.
D) $1.48.

Quizplus · Accepted Answer

The weighted-average method assigns costs to units based on the average cost per unit for the period. The equivalent units of production for conversion costs are calculated as follows:Beginning work-in-process inventory: 15,000 units x 80% complete = 12,000 equivalent unitsUnits started into production: 145,000 unitsTotal equivalent units: 12,000 + 145,000 = 157,000 equivalent unitsThe cost per equivalent unit for conversion costs is calculated as follows:Total conversion costs incurred: $175,700Cost per equivalent unit: $175,700 / 157,000 equivalent units = $1.64 (rounded to the nearest cent)

Reid Company Uses a Process Costing System in Which Units