Question

30

Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department’s operations in January.

	Units				Percent Complete with Respect to Conversion
Beginning work in process inventory		5,900				70	%
Transferred in from the prior department during January		59,800
Completed and transferred to the next department during January		57,600
Ending work in process inventory		8,100				40	%

The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $35,358 and a total of $560,054 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:

Multiple Choice

• $9.607

• $9.787

• $9.808

• $8.563

Answer 1

Here Answer is $9.787

Calculated as

RECONCILE THE NUMBER OF UNITS
BEGINNING UNITS	5900	UNITS COMPLETED	57600
UNITS STARTED	59800	ENDING UNITS	8100
TOTAL UNITS	65700	TOTAL UNITS	65700
STATEMENT OF EQUIVALENT PRODUCTION(WEIGHTED AVERAGE COST METHOD)
	UNITS	CONVERSION COST
		%COMPLETION	EQUIVALENT UNITS
FINISHED AND TRANSFERRED	57600	100	57600
CLOSING WORK IN PROGRESS	8100	40	3240
TOTAL PRODUCTION	65700		60840
STATEMENT OF COST
COST	CONVERSION COST
COST OF OPENING WIP	$                       35,358
COST IN AND DURING THE PROCESS	$                     560,054
TOTAL COST	$ 595412
EQUIVALENT UNITS	60840
COST PER UNIT=TOTAL COST/UNITS	$                       9.787

So Conversion cost per equivalent unit is $9.787

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