Question

A production department’s beginning inventory cost includes $408,000 of conversion costs. This department incurs an additional $1,047,500 in conversion costs in the month of March. Equivalent units of production for conversion total 965,000 for March. Calculate the cost per equivalent unit of conversion using the weighted-average method.

Answer 1

The cost per equivalent unit of conversion using the weighted-average method is $1.51.

Step-by-step explanation:

To calculate the cost per equivalent unit of conversion using the weighted-average method, you need to divide the total conversion costs by the total equivalent units of production for conversion.

In this case, the beginning inventory cost of conversion is $408,000, and the additional conversion costs incurred in March is $1,047,500. The total conversion costs would be $408,000 + $1,047,500 = $1,455,500.

The equivalent units of production for conversion in March is 965,000. Therefore, the cost per equivalent unit of conversion using the weighted-average method would be $1,455,500 / 965,000 = $1.51.

Answer 2

The cost per equivalent unit of conversion using the weighted-average method is $1.51

Step-by-step explanation:

The computation of the cost per equivalent unit of conversion is shown below:

= Total cost ÷ number of units produced

where,

Total cost = Beginning inventory + additional conversion costs

= $408,000 + $1,047,500

= $1,455,500

And, the Equivalent units of production is 965,000 units

Now put these values to the above formula

So, the cost per unit would equal to

= $1,455,500 ÷ 965,000 units

= $1.51