Question

Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 21,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $23,700. An additional 99,000 units were started into production during the month. There were 32,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $851,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:
a. $8.486b. $9.965c. $8.738d. $9.200

Answer 1

Answer:

cost per equivalent unit of conversion cost = 7.93

close to a 8.486

Explanation:

given data

beginning in = 21000

additional unit started = 99000

inventory = $23700

ending work = 32000

conversion costs =  $851880

to find out

The cost per equivalent unit for conversion costs for the month

solution

we find here first unit transfer out that is express as

unit transfer out = beginning work in + additional unit started - ending work in

unit transfer out = 21000 + 99000 -  32000 = 88000 unit

and

equivalent unit are here express as

equivalent unit = unit transfer out + ending work in × completion %

equivalent unit = 88000 + (32000  × 70 % )

equivalent unit = 110400 units

and  

we know cost per equivalent unit of conversion cost = $\frac{total cost}{equivalent unit}$

here total cost is = 23700 + 851,880 = $875580

cost per equivalent unit of conversion cost = $\frac{875580}{110400}$

cost per equivalent unit of conversion cost = 7.93