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30 April, 08:08

Destin Company uses the weighted average method in its process costing system. The first processing department, the welding department, started the month with 10,000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,200. An additional 60,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the welding department that were 70% complete with respect to conversion costs. A total of $383,060 in conversion costs were incurred in the department during the month. that would be the cost per equivalent unit for conversion costs for the month? (round off to three decimal places)

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  1. 30 April, 08:26
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    the cost per equivalent unit for conversion costs for the month is $ 6.256 (round off to three decimal places)

    Explanation:

    The Concept of Equivalent units measures the number of units of output in terms of percentage completion of a certain input element.

    In this question we are required to find the cost per equivalent unit for conversion costs.

    Step 1 Find the Total conversion costs for the period.

    Conversion cost in this beginning work in process inventory $19,200

    Conversion costs incurred in the during the month $383,060

    Total conversion costs for the period $402,260

    Step 2 Find the Total Equivalent units

    Hint : First find the Units Completed

    Units Completed = 10000+6000-19000

    = 51,000

    Total Equivalent units

    Units Completed (51,000 * 100 %) = 51,000

    Closing Work In progress (19,000 * 70 %) = 13,300

    Total Equivalent units = 64,300

    Step 3 Find cost per equivalent unit for conversion costs

    cost per equivalent unit = Total conversion costs / Total Equivalent units

    = $402,260 / 64,300

    = $ 6.256 (round off to three decimal places)
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