Question

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:

Answer 1

Universal Manufacturing

Equivalent unit cost for conversion cost is $18.

Step-by-step explanation:

a) Data and Calculations:

Beginning work in process = 10,000 units

Ending work in process = 15,000 units

Units started = 30,000 units

Units completed = 25,000 units

Cost of: Materials Conversion

Beginning WIP $60,000 $150,000

Current costs 180,000 480,000

Equivalent units of production: Materials Degree Conversion Degree

Units started and completed 25,000 100% 25,000 100%

Ending WIP 15,000 100% 10,000 2/3

Total equivalent unit 40,000 35,000

Total cost of production:

Cost of: Materials Conversion

Beginning WIP $60,000 $150,000

Current costs 180,000 480,000

Total cost $240,000 $630,000

Cost per equivalent unit:

Materials Conversion Total cost

Total cost $240,000 $630,000 $870,000

Total equivalent unit 40,000 35,000

Cost per equivalent unit $6 $18

b) Using the weighted average method, the costs in beginning inventory and current period costs are added and divided by the equivalent units of materials and conversion costs in order to establish an equivalent unit cost. The equivalent cost per unit in process costing describes the average unit cost for each product.