Question

Zink Company uses the weighted average method for process costing. The cost per equivalent unit for direct materials is $5.00. The cost per equivalent unit for conversion cost is $3.00. The company completed and transferred out is 40,000 units. The equivalent units of ending work-in-process for materials is an additional 3,000 units, for conversion is an additional 2,000 units. What is the total cost accounting for conversion?

Answer 1

Total accounting cost of the period or conversion: $126,000

Step-by-step explanation:

Cost per EUP Conversion: $3.00

Units Completed and transferred: 40,000

Ending WIP Conversion: 2,000

Equivalent Units of Production (EUP): Completed Units + Ending WIP Units

EUP Conversion = 40,000 + 2,000 = 42,000

Cost per Equivalent Unit: Cost of Unit x EUP

Cost per EUP Conversion = 42,000 x $3,000 = $126,000