Question

1. Department 2 is the second of three sequential processes. All materials are added at the beginning of processing in Department 2. During October, Department 2 reported the following data:

	Number of units	Conversion costs percentage complete
Units started	60,000	-
Completed and transferred	50,000	-
Work in process, October 1	26,000	60%
Work in process, October 31	36,000	20%

Costs for October	Transferred In	Materials	Conversion Costs
Work in process, October 1	$45,000	$25,000	$54,000
Added during the month	81,000	115,000	315,000

The company uses the weighted-average method in its process costing system. To the nearest cent, what is the cost per equivalent unit on the production report for conversion costs?

A) $6.30.         B) $5.51.         C) $7.38.         D) $6.45.

2. Reid Company uses a process costing system in which units go through several departments. In the Cutting Department for June, units in the beginning work-in-process inventory were 80% complete with respect to conversion costs. Units in the ending work-in-process inventory were 25% complete with respect to conversion costs. Other data for the department for June are as follows:

	Units	Conversion costs
Work in process inventory on June 1	15,000	$50,200
Units started into production	145,000
Conversion costs incurred during June		$175,700
Units completed and transferred to the next department during June	130,000

(Appendix 6A) Assuming that the company uses the FIFO cost method, what is the cost per equivalent unit for conversion costs for June, rounded to the nearest cent?

A) $1.35.         B) $1.68.         C) $1.80.         D) $1.40.

3. Ogden Company uses the weighted-average method in its process costing system. Information for the month of January concerning Department A, the first stage of the company's production process, follows:

	Materials	Conversion costs
Work in process, beginning	$8,000	$6,000
Current added during January	$40,000	$32,000
Equivalent units of production	100,000	95,000
Cost per equivalent unit	$0.48	$0.40

Units completed and transferred to the next department	90,000 units
Work in process, ending	10,000 units

Materials are added at the beginning of the process. The ending work in process is 50% complete with respect to conversion costs. What cost would be recorded for the ending work-in-process inventory?

A) $8,800.       B) $4,800.       C) $3,400.       D) $6,800.

Answer 1

Calculate cost per Equivalent unit for conversion cost under weighted average method

​​​equivalent units of production weighted average method

Particular	conversion
Unit's started and completed	50000
Ending inventory	(36000×20%) 7200
Total equivalent units	57200

calculate cost per Equivalent unit

Particular	conversion
Cost of beginning inventory	$54000
COST during the period	$315000
Total cost	$369000
Equivalent units	57200
Cost per Equivalent unit ($369000/57200)	$6.45

ANSWER:$6.45

2) calculate cost per Equivalent unit for conversion cost under fifo method

equivalent units under FIFO METHOD

Particular	conversion
Unit's started and completed (130000)
Beginning balance 15000	(15000× 20%) 3000
Unit started in the Period 115000	115000
Ending inventory (note)	(30000×25%) 7500
Total equivalent units	125500

cost per Equivalent under FIFO METHOD

Particular	conversion
Cost added during the period	$175700
Equivalent units	125500
Cost per Equivalent unit ($175700/125500)	$1.4

Answer :$1.4

3) cost of ending inventory under weighted average method

cost of ending inventory

Material =[10000× $0.48] =$4800

Conversion = [10000×50%×$0.40] = $2000

total cost of ending inventory = $4800+$2000 = $6800

answer:$6800

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