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3 April, 14:12

Kamin Company's mixing department had a beginning inventory of 4,000 units which had accumulated conversion costs of $55,000. During the period, the mixing department accumulated conversion costs of $92,000 and started 8,000 new units. Ending inventory was 2,500 units which were 40% complete with respect to conversion costs. Kamin uses the average cost method to cost inventories. Required: Calculate the cost per equivalent unit for conversion costs in the mixing department.

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  1. 3 April, 14:36
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    The cost per equivalent unit for conversion costs in the mixing department is $ 14.19

    Explanation:

    Step 1 Calculate the Number of Units Completed

    Hint: Units input in process must equal units out of the process

    Therefore Units Completed = 4,000 units+8,000 units - 2,500 units

    = 9,500 units

    Step 2 Calculate the total conversion cost in the process for the period

    Hint : Conversion costs in Opening Work In Progress + Conversion Costs Started during the Process

    Therefore:

    Opening Work In Progress $55,000

    Add Started during the Process $92,000

    Total Conversion Costs $149,000

    Step 3 Calculate total Equivalent Units related to Conversion Costs

    Completed Units - 100% 9,500

    Closing Work in Progress - 40% 1,000

    Total 10,500

    Step 4 The cost per equivalent unit for conversion costs in the mixing department

    cost per equivalent unit for conversion costs = total conversion cost / total Equivalent Units

    = $149,000 / 10,500

    = $ 14.19
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