Hanson Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,000 units in its beginning work in process inventory that were 60% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $90,780. An additional 84,000 units were started into production during the month and 82,000 units were completed in the Welding Department and transferred to the next processing department. There were 19,000 units in the ending work in process inventory of the Welding Department that were 40% complete with respect to conversion costs. A total of $690,780 in conversion costs were incurred in the department during the month.
The cost per equivalent unit for conversion costs is closest to:
a. $6.707
b. $8.224
c. $8.900
Selected: d. $8.723This answer is correct.
Correct! Beginning work in process 17,000 plus units started into production 84,000 less ending work in process 19,000 equals 82,000 units completed and transferred out. Equivalent units for conversion is 82,000 transferred to next department plus 7,600 ending work in process which was 19,000 units that were 40 percent complete equals 89,600 equivalent units of production. Cost of beginning work in process $90,780 plus cost added during the period $690,780 equals total cost $781,560. Total cost $781,560 divided by equivalent units of production 89,600 equals $8.723 cost per equivalent unit.