Question

Annenbaum Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 1,800 units. The costs and percentage completion of these units in beginning inventory were:

Cost Percent Complete
Materials costs $7,100 65%
Conversion costs $8,200 45%

A total of 9,300 units were started and 7,300 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Cost
Materials costs $126,900
Conversion costs $208,400

The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs. The cost per equivalent unit for conversion costs for the first department for the month is closest to:_______

Answer 1

Ending Inventory Units = 500 + 6700 - 6000 = 1200 units

Equivalent units for Material = Units completed and transferred*100% + Ending Inventory units*50% = 6000*100% + 1200*50%

= 6000 + 600 = 6600 units

Cost per equivalent unit for materials = (Beginning Material cost + Material cost incurred during the month) / Equivalent units for Material

= ($5800 + $125600) / 6600

= $19.91

Hence, third option is correct.