David Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 60% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $131,200. An additional 81,000 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 15% complete with respect to conversion costs. A total of $413,250 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?
Answer: equivalent unit for conversion costs= $6.57
Working notes for the above answer is as under
Weighted-average method
Units transferred to the next department = Units in beginning work in process + Units started into production − Units in ending work in process
= 18,000 + 81,000 − 19000 = 80,000
Conversion
Units transferred to the next department 80,000
Ending work in process:
Conversion: 19,000 units × 15%
2850
Equivalent units of production
82850
Conversion
Cost of beginning work in process inventory $131200
Costs added during the period……………….. 413250
Total cost (a) ……………………………………….$ 544,450
Equivalent units of production (b) 82850
Cost per equivalent unit (a) ÷ (b) $6.57
