Question

Mickler Productions uses process costing. Its Mixing Department incurred conversion costs of $650,820 during January, and had a beginning Work in Process inventory of $30,430 for conversion costs. 54,000 units were transferred out of the department, and the ending inventory consisted of 2,500 units that are 20% complete with respect to conversion costs. What is the conversion cost per equivalent unit during January? $12.05 $12.62 $12.17 $12.50

Answer 1

$12.50

Step-by-step explanation:

Calculation of Equivalent units of production with respect to conversion costs

Ending Work In Process (2,500 × 20%) 500

Completed and Transferred Out (54,000 × 100%) 54,000

Equivalent units of production with respect to conversion costs 54,500

Calculation of the conversion cost per equivalent unit

cost per equivalent unit = Total Cost ÷ Total Equivalent Units

= ($30,430 + $650,820) ÷ 54,500

= $12.50