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 cost of conversion by the equivalent units of production.

Total cost of conversion = Conversion cost in beginning WIP + Conversion cost incurred during the month = $68,064 + $585,324 = $653,388

Equivalent units of production = Units started and completed + Equivalent units in ending WIP

Units started and completed = 81,000 
Equivalent units in ending WIP = 6,000 x 50% = 3,000

Equivalent units of production = 81,000 + 3,000 = 84,000

Cost per equivalent unit for conversion costs = Total cost of conversion / Equivalent units of production = $653,388 / 84,000 = $7.768

Rounding off to three decimal places, the cost per equivalent unit for conversion costs for the month is $6.892, which corresponds to choice C.

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