Hache Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,000 units in its beginning work in process stock that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process stock was £7,480. An additional 89,000 units were started into production during the month and 92,000 units were completed in the Welding Department and transferred to the next processing department. There were 14,000 units in the ending work in process stock of the Welding Department that were 90% complete with respect to conversion costs. A total of £202,400 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

Using the weighted-average method:
Conversion cost per equivalent unit = Total conversion cost for the period ÷ equivalent units of production for the period

Total equivalent units of production = Units completed and transferred out + Ending work in process units (in terms of completed units)
Total equivalent units of production = 92,000 + (14,000 × 90%) = 92,000 + 12,600 = 104,600

Conversion cost per equivalent unit = £202,400 ÷ 104,600 = £2.007 (rounded off to three decimal places)

Therefore, the cost per equivalent unit for conversion costs for the month is £2.007, and the best choice is C.

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