Harker Company uses the weighted-average method in its process costing system.The first processing department,the Welding Department,started the month with 16,000 units in its beginning work-in-process inventory that were 40% complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $29,440.An additional 59,000 units were started into production during the month,and 61,000 units were completed in the Welding Department and transferred to the next processing department.There were 14,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs.A total of $246,400 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) $4.176.
B) $4.600.
C) $3.375.
D) $4.421.

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated by adding the conversion costs in the beginning work-in-process inventory to the conversion costs incurred during the month, and then dividing by the total equivalent units for conversion costs. Beginning conversion costs: $29,440Conversion costs incurred: $246,400Total conversion costs: $29,440 + $246,400 = $275,840Equivalent units for conversion costs:- Completed units: 61,000 (100% complete)- Ending work-in-process inventory: 14,000 units * 10% = 1,400 equivalent units- Beginning work-in-process inventory: 16,000 units * 40% = 6,400 equivalent units (since they were already 40% complete, we only consider the remaining 60% to complete them, but for the weighted-average method, we consider the total percentage completed during the process)- Total equivalent units for conversion costs = 61,000 + 1,400 = 62,400 (The beginning inventory is not added to the calculation of equivalent units in the weighted-average method, my mistake in the initial explanation)Cost per equivalent unit for conversion costs = Total conversion costs / Total equivalent units for conversion costs= $275,840 / 62,400 = $4.421Therefore, the correct answer is D) $4.421.

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