Question

In: Accounting

Annenbaum Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory...

	Cost		Percent Complete
Materials costs	$	5,700		65%
Conversion costs	$	6,800		45%

A total of 6,500 units were started and 5,900 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

	Cost
Materials costs	$	125,500
Conversion costs	$	207,000

The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs.

The cost per equivalent unit for conversion costs for the first department for the month is closest to:

Multiple Choice

$30.99

$35.92

$33.12

$34.21

Sumter Corporation uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month:


Work in process, beginning:
Units in process		6,000
Percent complete with respect to materials		60	%
Percent complete with respect to conversion		20	%
Costs in the beginning inventory:
Materials cost	$	78,200
Conversion cost	$	3,600
Units started during the month		?
Units completed and transferred out during the month		70,000
Costs added to production during the month:
Materials cost	$	286,600
Conversion cost	$	216,000
Work in process, ending:
Units in process		8,000
Percent complete with respect to materials		75	%
Percent complete with respect to conversion		25	%

What was the cost per equivalent unit for conversion during the month?

Multiple Choice

$5.45

$6.95

$4.00

$3.05

Solutions

Expert Solution

Answer:

cost per equivalent unit for conversion costs =$34.21

Working notes for the above answer is as under

No. of physical units in the ending inventory

= Beginning + started - Transferred

= 400+6500-5900

= 1000 units

Calculation of Equivalent units:

Material = 5900 + 1000*50% = 6400

Conversion = 5900+1000*35% = 6250

Calculation of cost per equivalent unit for materials:

	Materials costs	Conversion costs
Opening	5,700	6,800
Added during the period	125,500	207,000
Total Cost	131,200	213,800
Divided by equivalent unit	6400	6250
Cost per equivalent unit	20.5	34.21

cost per equivalent unit for conversion costs =$34.21

____________________________________________________________________________________

Answer:

cost per equivalent unit for conversion costs =$3.05

Working notes for the above answer is as under

	units
Closing units in process	8000
Add: Completed and transferred	70000
Less: Opening Units in process	6000
Units Started for production	72000

	Materials	Conversion cost
Completed and transferred
Add:	70000	70000
Closing units
Material 8000*75%=6000	6000
Conversion 8000*25% =2000		2000
Equivanet Unit	76000	72000

Computation of cost per equivalent unit for conversion during the month

	Materials	Conversion cost
Opening cost $	78200	3600
Add: cost incurred during the month $	286600	216000
Therefore total cost (a) $	364800	219600
Equivalent units produced (b) units	76000	72000
Cost per equivalent unit (a/b) $	4.8	3.05

cost per equivalent unit for conversion costs =$3.05

ekkarill92 answered 1 year ago

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