Question

Thomas Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 10,000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,200. An additional 60,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $380,060 in conversion costs were incurred in the department during the month.What would be the cost per equivalent unit for conversion costs for the month?

Answer 1

Cost per equivalent unit for conversion costs for the month = $6.21

Step-by-step explanation:

The weighted average cost of valuation does not separate the opening inventory from the units newly introduced when accounting for completed units in a production period.

To determine the cost per equivalent units using Weighted Average Method, follow the steps below:

Step 1: Determine the equivalent Unit

Completed units = 10,000+ 60,000-19000= 51000

Items Workings Equiva. Units

Completed units 51,000 (51000 *100%) = 51,000

Closing WIP 19,000 19,000 * 70%) = 2,800

Total Equivalent units 64,300

Step 2 : calculate total conversion cost

= 19,200 + $380,060 = 399,260

Step 3 = Cost per Equivalent unit per conversion cost

Cost per unit = Total conversion cost/total Equivalent units

=399,260 /64,300

= $6.21

Cost per equivalent unit for conversion costs for the month = $6.21