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20 October, 15:10

Nebraska Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 25,000 units in its beginning work-in-process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $51,820. An additional 97,000 units were started into production during the month. There were 28,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $747,970 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? (Round to three decimal places.)

a. $8.130.

b. $8.696.

c. $7.885.

d. $5.584

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  1. 20 October, 15:28
    0
    Cost per equivalent unit for conversion costs for the month = $8.262

    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 = 25000 + 97000 - 28000 = 94000

    Workings Equiva. Units

    Completed units 94000 (94000 * 100%) = 94,000

    Closing WIP 28000 (28,000 * 10%) = 2,800

    Total Equivalent units 96,800.00

    Step 2 : calculate total conversion cost

    = 51820+747970 = 799,790.00

    Step 3 = Cost per Equivalent unit per conversion cost

    Cost per unit = Total conversion cost/total Equivalent units

    = 799,790.00 / 96,800.00

    = $8.262

    Cost per equivalent unit for conversion costs for the month = $8.262
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