Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Units % complete

Beginning work in process inventory 5,100 70 %

Transferred in from the prior department during January 59,000

Completed and transferred to the next department during January 56,800 Ending work in process inventory 7,300 40 % The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:

Question

Ben

Business

20 April, 12:49

Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Units % complete

Beginning work in process inventory 5,100 70 %

Transferred in from the prior department during January 59,000

Completed and transferred to the next department during January 56,800 Ending work in process inventory 7,300 40 % The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:

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Answers (1)

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Raina Faulkner · Answer 1

The cost per equivalent unit for conversion costs for January in the Molding Department is closest to $9.94

Explanation:

The concept of Equivalent Units of Production focus on the output in terms of percentage of completion in the inputs in that process.

Calculation of Total Conversion cost for the Molding Department for January

Beginning Work In Process Inventory $34,558

Incurred during the year $559,254

Total Conversion cost $593812

Calculation of Total Equivalent Units for the Molding Department for January

Ending work in process inventory 7,300 * 40 % 2920

Completed and transferred 56,800 * 100% 56800

Total Equivalent Units 59,720

Calculation of Cost per equivalent unit

Cost per equivalent unit = Total Conversion cost $593812 / Total Equivalent Units 59,720 = 9.94 (2 d. p)