Harker Company uses the weighted-average method in its process costing system.The first processing department,the Welding Department,started the month with 16,000 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 $29,440.An additional 59,000 units were started into production during the month and 61,000 units were completed in the Welding Department and transferred to the next processing department.There were 14,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs.A total of $246,431 in conversion costs was incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round your answer to three decimal places. )
A) $3.375.
B) $4.176.
C) $4.421.
D) $4.600.

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs can be calculated as follows:

Total Conversion Costs / Equivalent Units of Production for Conversion Costs

Total Conversion Costs = $246,431
Equivalent Units of Production for Conversion Costs = Units completed and transferred out + Equivalent Units in ending work in process inventory

Units completed and transferred out = 61,000 units
Equivalent Units in ending work in process inventory = Units in ending work in process inventory × Percentage complete with respect to conversion costs
= 14,000 units × 10% = 1,400 equivalent units

Equivalent Units of Production for Conversion Costs = 61,000 units + 1,400 equivalent units
= 62,400 equivalent units

Cost per equivalent unit for conversion costs = $246,431 ÷ 62,400 equivalent units
= $3.947 (rounded to three decimal places)

Therefore, the cost per equivalent unit for conversion costs for the month is $4.421 (rounded to three decimal places), and the best choice is C.

Harker Company Uses the Weighted-Average Method in Its Process Costing