Question

Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $7,480. An additional 89,000 units were started into production during the month and 92,000 units were completed in the Welding Department and transferred to the next processing department. There were 14,000 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $202,400 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

A. 2.274

B. 2.200

C. 2.007

D. 1.965

Answer 1

C. $2.007

Step-by-step explanation:

The computation of cost per equivalent unit for conversion costs is shown below:-

For calculating the cost per equivalent unit for conversion costs first we need to find out the equivalent unit of conversion and conversion cost which is shown below:-

Equivalent unit of conversion = Completed units + (Ending units × Complete percentage)

= 92,000 + (14,000 × 90%)

= 104,600 units

Conversion cost = Beginning inventory + Total of conversion cost

= $7,480 + $202,400

= $209,880

Cost per equivalent unit of conversion cost = Conversion cost ÷ Equivalent unit of conversion

= $209,880 ÷ 104,600

= $2.007