Use the information below to answer the following questions:
The Adams Company uses a process costing system. During the current period, 1,600 units were started and 1,200 units were completed and transferred out. Ending units were 70% complete for materials and 35% complete for conversion costs. Direct materials costs added were $32,500 and conversion costs added were $31,400. 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 for the Adams Company would be closest to

Question

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for conversion costs, we need to calculate the total cost of conversion costs added during the period and divide it by the equivalent unit of production for conversion costs. 
Total cost of conversion costs added = $31,400 
Equivalent units for conversion costs = (completed units x 100%) + (ending WIP units x % completion) 
= (1,200 x 100%) + (400 x 35%) 
= 1,200 + 140 
= 1,340 
Cost per equivalent unit for conversion costs = Total cost of conversion costs added / Equivalent units for conversion costs = $31,400 / 1,340 = $23.43. Therefore, the closest choice is B.

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