In: Accounting
Bentley Enterprises uses process costing to control costs in the
manufacture of Dust Sensors for the mining industry. The following
information pertains to operations for November. (CMA Exam
adapted)
Units | |||
Work in process, November 1st | 17,600 | ||
Started in production during November | 116,000 | ||
Work in process, November 30th | 25,600 | ||
The beginning inventory was 60% complete as to materials and 20%
complete as to conversion costs. The ending inventory was 80%
complete as to materials and 40% complete as to conversion
costs.
Costs pertaining to November are as follows:
Beginning inventory: direct materials, $56,160; direct labor,
$21,920; manufacturing overhead, $16,840.
Costs incurred during the month: direct materials, $484,000; direct
labor, $198,880; manufacturing overhead, $407,160.
What is the equivalent unit cost for the conversion costs assuming
Bentley uses weighted-average process costing?
$4.90.
$5.28.
$5.45.
$5.65.
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Note: We have to calculated weighted average conversion cost so material cost will not be considered here. | ||||||
Labor | Manufacturing Overhead | Total | ||||
Opening Balance | 21,920.00 | 16,840.00 | 38,760.00 | |||
During the year | 198,880.00 | 407,160.00 | 606,040.00 | |||
Total conversion cost (A) | 220,800.00 | 424,000.00 | 644,800.00 | |||
Equivalent Units | ||||||
Opening Work in Process | 17,600.00 | |||||
Started in production | 116,000.00 | |||||
Closing Work in Process | 25,600.00 | |||||
Units Produced | 108,000.00 | |||||
Add: Closing Equivalent units | 10,240.00 | |||||
40% complete as to conversion costs i.e. 25,600*40% | ||||||
Total Equivalent Units (B) | 118,240.00 | 118,240.00 | ||||
Equivalent unit cost for the conversion costs (C=A/B) | 5.45 | |||||