Darden 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 stock. These units were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process stock was £16,200. An additional 84,000 units were started into production during the month. 17,000 units were in the ending work in process stock of the Welding Department. These units were 70% complete with respect to conversion costs. A total of £836,880 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 off to three decimal places.)

Question

Quizplus · Accepted Answer

Step 1: Calculate equivalent units for beginning work in process stock
= 18,000 units x 10% completion
= 1,800 equivalent units

Step 2: Calculate equivalent units for units started into production
= 84,000 units
= 84,000 equivalent units

Step 3: Calculate equivalent units for ending work in process stock
= 17,000 units x 70% completion
= 11,900 equivalent units

Step 4: Total equivalent units
= 1,800 equivalent units + 84,000 equivalent units + 11,900 equivalent units
= 97,700 equivalent units

Step 5: Calculate total conversion costs per equivalent unit
= £836,880 ÷ 97,700 equivalent units
= £8.804 per equivalent unit

Therefore, the cost per equivalent unit for conversion costs for the month is £8.804. The best choice is C.

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