Question

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 37,000 units, 100% complete as to materials and 60% complete as to conversion. Units started and completed: 134,000. Units completed and transferred out: 171,000. Ending Inventory: 36,000 units, 100% complete as to materials and 35% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $55,000. Costs in beginning Work in Process - Conversion: $60,850. Costs incurred in February - Direct Materials: $369,560. Costs incurred in February - Conversion: $611,150. Calculate the cost per equivalent unit of conversion.

a. 3.20

b. 4.98

c. 4.58

d. 3.91

e. 3.66

Answer 1

Calculation of equivalent unit
Particulars			unit	material %	unit	% conversion	Unit
Unit completed			171000	100%	171000	100%	171000
WIP- Ending			36000	100%	36000	35%	12600
Equivalent unit			207000		207000		183600
Calculation of cost per equivalent unit of conversion
Particulars			Conversion cost
Beginning cost of inventory			60850
Cost incurred in February			611150
Total cost			672000
Cost per equivalent unit of conversion = total cost of conversion/equivalent unit of conversion
Cost per equivalent unit of conversion = 672000/183600
Cost per equivalent unit of conversion = 3.66
Option " e" is CORRECT