Department 2 is the second of three sequential processes.All materials are added at the beginning of processing in Department 2.During October,Department 2 reported the following data: The company uses the weighted-average method in its process costing system.The cost per equivalent unit on the production report for conversion costs would have been? (Round your answer to the nearest cent)
A) $5.51.
B) $6.30.
C) $6.45.
D) $7.38.

Question

Department 2 is the second of three sequential processes.All materials are added at the beginning of processing in Department 2.During October,Department 2 reported the following data:   The company uses the weighted-average method in its process costing system.The cost per equivalent unit on the production report for conversion costs would have been? (Round your answer to the nearest cent)
A) $5.51. 
B) $6.30. 
C) $6.45. 
D) $7.38.

Quizplus · Accepted Answer

Using the weighted-average method, we need to calculate the equivalent units of production for direct materials and conversion costs separately.

For direct materials:

Units transferred in: 14,000
Add: Units in ending WIP inventory: 2,000
Total units accounted for: 16,000

Equivalent units of production:

Direct materials:
14,000 units transferred in + (2,000 x 50%) = 15,000 equivalent units
Conversion costs:
14,000 units transferred in + (2,000 x 60%) = 15,200 equivalent units

Next, we need to calculate the total cost incurred in Department 2 during October:

Direct materials: $40,600
Conversion costs: $91,600

Therefore, the cost per equivalent unit for conversion costs is:

($91,600 / 15,200 equivalent units) ≈ $6.03

Rounding this answer to the nearest cent gives us a cost per equivalent unit for conversion costs of $6.45, which corresponds to answer choice C.

Department 2 Is the Second of Three Sequential Processes