Question

A company uses the weighted average method for inventory costing. At the start of a period the production department had 28,000 units in beginning Work in Process inventory which were 44% complete; the department completed and transferred 169,000 units. At the end of the period, 26,000 units were in the ending Work in Process inventory and are 79% complete. The production department had conversion costs in the beginning goods is process inventory of $103,000 and total conversion costs added during the period are $726,925. Compute the conversion cost per equivalent unit.

Answer 1

$4.38 per unit

Step-by-step explanation:

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

The conversion cost per equivalent unit is

= Total conversion cost ÷ conversion cost units

where,

Total conversion cost is

= Beginning work in process + added cost

= $103,000 + $726,925

= $829,925

And, the conversion units is

= Transferred units + ending work in process units × completion percentage

= 169,000 units + 26,000 units × 0.79

= 169,000 units + 20,540 units

= 189,540 units

So, the conversion cost per unit is

= $829,925 ÷ 189,540 units

= $4.38 per unit