Question

Dorchester Company, on March 1, 2019 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Dorchester started into production 15,500 units. At the end of the month there were 10,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 70% complete with respect to conversion. For the month of March the following costs were incurred and recorded in the WIP:

Direct Material $26,000

Direct Labor 17,000

Factory Overhead 25,000

Dorchester uses the weighted-average process costing method. Use this information to determine the cost per equivalent unit of conversion for the month of March: (Round & enter final answers to the nearest cent.)

Answer 1

Answer:

Cost per equivalent unit of conversion for the month of March

$4.71

Calculation:

First step is to find the ending work in process units by doing the reconciliation. For that we need to take the units in production and deduct the transferred out units

Reconciliation of Units:

Beginning WIP	-
Started into production	15,500
Total	15,500
Transferred out	(10,000)
Ending WIP	5,500

Next step is to find the Total Equivalent Units as for Material and Conversion cost

Statement of Equivalent Units (Weighted average)
		Material		Conversion cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	10,000	100%	10,000	100%	10,000
Ending WIP	5,500	100%	5,500	70%	3,850
Total	15500		15,500		13,850

Then we need to divide the total cost accounted for with the number of equivalent units

Cost per Equivalent Units (Weighted average)
COST	Material	Conversion cost	Total
Beginning WIP Inventory Cost	-	-	-
Cost incurred during period	26,000	42,000	52,700
Total Cost to be accounted for (a)	26,000	42,000	52,700
Total Equivalent Units (b)	15,500	13,850
Cost per Equivalent Units (a)/(b)	$1.68	$3.03	$4.71

So when we add the  Material and Conversion cost per Equivalent Units we get the total Cost per Equivalent Units of 4.71.