Question

The debits to Work in Process—Assembly Department for April, together with data concerning production, are as follows: April 1, work in process: Materials cost, 3,000 units $7,200 Conversion costs, 3,000 units, 80% completed 5,100 Materials added during April, 10,000 units 27,500 Conversion costs during April 34,600 Goods finished during April, 11,500 units 0 April 30 work in process, 1,500 units, 60% completed 0 All direct materials are placed in process at the beginning of the process, and the average cost method is used to cost inventories. The conversion cost per equivalent unit (rounded to the nearest cent) for April is

Answer 1

• The question does not state whether to use FIFO method or Weighted Average method, hence,
  Answer to “conversion cost per equivalent unit” is given using BOTH the methods.
• Answer as per FIFO:
  Conversion cost per equivalent unit = $ 3.46 per EU

EUP - FIFO Method	Units	% Conversion	EUP - Conversion
Units of ENDING WIP	1,500	60.0%	900
Units STARTED & COMPLETED	8,500	100%	8,500
Units of beginning WIP	3,000	20.00%	600
Equivalent Units of Production			10,000
COST per EUP			Conversion
Cost incurred this period			$                    34,600.00
Total Costs		Costs	$                    34,600.00
Equivalent units of production		EUP	10,000
Cost per EUP			$                          3.4600

• Answer as per Weighted Average:
  Conversion cost per EU = $ 3.20

EUP - Weighted Average Method	Units	% Conversion	EUP - Conversion
Units TRANSFERRED	11,500	100%	11,500
Units of ENDING WIP	1,500	60%	900
Equivalent Units of Production			12,400
COST per EUP			Conversion
Cost of Beginning WIP			$                                    5,100.00
Cost incurred during the period			$                                  34,600.00
Total Costs		Costs	$                                  39,700.00
Equivalent units of production		EUP	12,400
Cost per EUP			$                                      3.20