Question

Ego Manufacturing produces a pesticide chemical and uses process costing. There are three processing

departmentslong dash—​Mixing,

​Refining, and Packaging. On January​ 1, the Refining Department had

3 comma 0003,000

gallons of partially processed product in production. During​ January,

33 comma 00033,000

gallons were transferred in from the Mixing​ Department, and

29 comma 00029,000

gallons were completed and transferred out. At the end of the​ month, there were

7 comma 0007,000

gallons of partially processed product remaining in the Refining Department. See additional details below.

Refining​ Department, beginning balance at January 1

​Quantity:

3 comma 0003,000

units​ (partially processed)​Cost:

$ 15 comma 600$15,600

of costs transferred in

$ 4 comma 500$4,500

of materials cost

$ 1 comma 800$1,800

of conversion cost

21 comma 90021,900

total account balance

Costs added during January

Cost of units transferred in $ 222 comma 400$222,400

Direct materials cost $ 93 comma 750$93,750

Conversion cost $ 45 comma 000$45,000

Refining​ Department, ending balance at January 31

​Quantity:

7,000

units​ (partially processed)Percent complete for materials​ cost:

85​%

Percent complete for conversion​ cost:

70%

What was the cost per equivalent unit with respect to conversion costs for the Refining Department in the month of​ January? (Use the

weightedminus−average

​method, and round your calculations to the nearest​ cent.)  

Answer 1

• All working forms part of the answer
• Question asked: Cost per Equivalent units for Conversion cost
• Working #1:

Reconciliation of Units
A	Opening WIP	3,000
B	Introduced	33,000
C=A+B	TOTAL	36,000
D	Transferred	29,000
E=C-D	Closing WIP	7,000

• Working #2

Statement of Equivalent Units
		Cost Transferred		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	29,000	100%	29,000	100%	29,000	100%	29,000
Closing WIP	7,000	100%	7,000	85%	5,950	70%	4,900
Total	36,000	Total	36,000	Total	34,950	Total	33,900

• Working #3

Cost per Equivalent Units
COST	Cost Transferred	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$             15,600.00	$             4,500.00	$                1,800.00	$           21,900.00
Cost incurred during period	$          222,400.00	$          93,750.00	$              45,000.00	$          361,150.00
Total Cost to be accounted for	$          238,000.00	$          98,250.00	$              46,800.00	$          383,050.00
Total Equivalent Units	36,000	34,950	33,900
Cost per Equivalent Units	$                   6.61	$                2.81	$                    1.38 = ANSWER

• Answer, based on above workings

Cost per Equivalent unit for CONVERSION COST = $ 1.38 per unit