Asked by Jewel Methu on Apr 27, 2024
Verified
Kamin Company's Mixing Department had a beginning inventory of 4,000 units, which had accumulated conversion costs of $55,000. During the period, the Mixing Department accumulated conversion costs of $92,000 and started 8,000 new units. Ending inventory was 2,500 units which were 40% complete with respect to conversion costs. Kamin uses the average cost method to cost inventories.Calculate the cost per equivalent unit for conversion costs in the Mixing Department.
Conversion Costs
The combined costs of direct labor and overhead expenses incurred to convert raw materials into finished goods.
Average Cost Method
An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all similar items in inventory, regardless of purchase date.
- Estimate the cost per equivalent unit employing the mean cost strategy.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
Units Transferred Out = 4,000 + 8,000 - 2,500 = 9,500 unitsEquivalent Units = 9,500 +
(2,500 × 40%) = 10,500Cost per equivalent unit for conversion costs =
($55,000 + $92,000)/10,500 = $14
(2,500 × 40%) = 10,500Cost per equivalent unit for conversion costs =
($55,000 + $92,000)/10,500 = $14
Learning Objectives
- Estimate the cost per equivalent unit employing the mean cost strategy.
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