Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs follow.
Beginning work in process: Materials, $60,000; conversion cost, $150,000
Current costs: Materials, $180,000; conversion cost, $480,000
Universal's equivalent-unit cost for conversion cost is:
A) $13.71.
B) $18.00.
C) $21.00.
D) $25.20.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units (EU) for conversion costs. To do this, we use the following formula:
EU = Units completed + (Ending WIP x % Complete)
EU = 25,000 + (15,000 x 2/3)
EU = 25,000 + 10,000
EU = 35,000 units

Next, we can calculate the total conversion costs by adding the beginning and current costs:
Total Conversion Costs = Beginning Conversion Costs + Current Conversion Costs
Total Conversion Costs = $150,000 + $480,000
Total Conversion Costs = $630,000

Finally, we can calculate the equivalent-unit cost for conversion costs by dividing the total conversion costs by the equivalent units:
Equivalent-unit Cost = Total Conversion Costs / EU
Equivalent-unit Cost = $630,000 / 35,000
Equivalent-unit Cost = $18.00 per unit.

Therefore, the answer is B.

Universal Manufacturing Uses a Weighted-Average Process-Costing System