The Jones Corporation uses a process system. During the current period, 2,500 units were started and 1,100 units were completed and transferred out. Ending units were 60% complete for materials and 45% complete for conversion costs. Direct materials costs added were $35,405 and conversion costs added were $32,870. There was no beginning WIP inventory and conversion costs are added evenly throughout the process. At the end of the period, the cost per equivalent unit for conversion costs would be closest to

Question

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for conversion costs, we need to calculate the equivalent units of production first.

Units started = 2,500
Units completed and transferred out = 1,100
Ending WIP units = 2,500 - 1,100 = 1,400

For materials:

Equivalent units of production = Units completed and transferred out + Ending WIP units x % complete
Equivalent units of production = 1,100 + (1,400 x 60%) = 1,860

For conversion costs:

Equivalent units of production = Units completed and transferred out + Ending WIP units x % complete
Equivalent units of production = 1,100 + (1,400 x 45%) = 1,730

Next, we need to calculate the total cost for each category:

Total direct materials cost added = $35,405
Total conversion costs added = $32,870

Finally, we can calculate the cost per equivalent unit for conversion costs:

Cost per equivalent unit for conversion costs = Total conversion costs added / Equivalent units of production for conversion costs
Cost per equivalent unit for conversion costs = $32,870 / 1,730
Cost per equivalent unit for conversion costs = $19.00

Therefore, the closest answer choice is C.

The Jones Corporation Uses a Process System