Nebraska Company 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 30% complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $44,820.An additional 90,000 units were started into production during the month.There were 21,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs.A total of $677,970 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? (Round to three decimal places. )

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated by adding the conversion costs in beginning inventory ($44,820) to the conversion costs incurred during the month ($677,970) and dividing by the equivalent units of production. Equivalent units are calculated as units completed and transferred out plus equivalent units in ending inventory. Here, the equivalent units are 87,900 (completed) + 2,100 (ending inventory) = 90,000. Thus, the cost per equivalent unit is ($44,820 + $677,970) / 90,000 = $8.112.

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