Asked by Hannah Charlton on May 21, 2024
Verified
Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $16,200. An additional 84,000 units were started into production during the month. There were 17,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $836,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:
A) $8.286
B) $9.000
C) $8.804
D) $9.963
Conversion Costs
are the costs required to convert raw materials into finished goods, comprising direct labor and manufacturing overhead.
Weighted-Average Method
An inventory costing method that calculates the cost of ending inventory and the cost of goods sold based on the weighted average cost of all items available for sale.
Welding Department
A specific division within a manufacturing facility focused on welding processes, often critical in the fabrication and assembly of metal parts.
- Attain proficiency in computing the cost per equivalent unit for conversion expenses under various scenarios.
Verified Answer
Units:
Beginning work in process inventory = 18,000
Units started into production = 84,000
Total units = 102,000
Conversion Costs:
Beginning work in process inventory = $16,200
Conversion costs incurred during the month = $836,880
Total conversion costs = $853,080
Equivalent Units of Production:
Units in beginning work in process inventory = 18,000 x 10% = 1,800
Units started into production = 84,000
Units in ending work in process inventory = 17,000 x 70% = 11,900
Total equivalent units of production = 97,700
Step 2: Calculation of Cost per Equivalent Unit of Production for Conversion Costs
Cost per equivalent unit of production = Total conversion costs / Equivalent units of production
Cost per equivalent unit of production = $853,080 / 97,700
Cost per equivalent unit of production = $8.804 (rounded to the nearest cent)
Therefore, the cost per equivalent unit for conversion costs for the month is closest to option C: $8.804.
Learning Objectives
- Attain proficiency in computing the cost per equivalent unit for conversion expenses under various scenarios.
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