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Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 790,000 units of product to finished goods. At the end of November, the work in process inventory consists of 180,000 units that are 70% complete with respect to conversion. Beginning inventory had $252,200 of direct materials and $137,400 of conversion cost. The direct material cost added in November is $1,687,800, and the conversion cost added is $2,610,600. Beginning work in process consisted of 78,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 78,000 were from beginning work in process and 712,000 units were started and completed during the period.

2. Compute both the direct material cost and the conversion cost per equivalent unit.

Cost per equivalent unit of production		Materials		Conversion
Total costs	Costs		Costs
÷ Equivalent units of production	EUP		EUP
Cost per equivalent unit of production (rounded to 2 decimals)		0		0

Answer 1

2)

Cost per equivalent unit of production			Materials		Conversion
Cost of beginning work in process			$252,200		$137,400
Cost incurred this period			$1,687,800		$2,610,600
Total costs		Costs	$1,940,000	Costs	$2,748,000
÷ equivalent units of production (note 1)		EUP	970,000	EUP	916,000
Cost per equivalent unit of production			$2 ($1,940,000/970,000)		$3 ($2,748,000/916,000)

Note:-

1)

Equivalent units of production	Direct Materials	Conversion
Units completed and transfered out	790,000	790,000
Unit of ending work in process
Direct Materials (180,000 ×100%)	180,000
Conversion (180,000 × 70%)		126,000
Equivalent units of production	970,000	916,000