Stay Corporation uses the weighted-average method in its process costing system. The company's ending work in process inventory consists of 8,000 units, 60% complete with respect to materials and 80% complete with respect to conversion costs. If the total cost in this inventory is $200,000 and if the cost for materials is $16 per equivalent unit for the period, the conversion cost per equivalent unit of the production for the period must be:
A)$19.25
B)$16.00
C)$25.67
D)$31.25

Question

Quizplus · Accepted Answer

To find the conversion cost per equivalent unit, first calculate the equivalent units for materials and conversion. Materials: 8,000 units * 60% = 4,800 equivalent units. Conversion: 8,000 units * 80% = 6,400 equivalent units. Total cost = $200,000. Material cost = 4,800 units * $16 = $76,800. Conversion cost = $200,000 - $76,800 = $123,200. Conversion cost per equivalent unit = $123,200 / 6,400 = $19.25.

Stay Corporation Uses the Weighted-Average Method in Its Process Costing