Question

Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,050 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $7,520. An additional 89,100 units were started into production during the month and 92,100 units were completed in the Welding Department and transferred to the next processing department. There were 14,050 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $202,500 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:

Answer 1

Weighted-average method
Units transferred to the next department = 92,100
Ending work in process:
              Conversion: 14,050 units × 90% = 12,645
Equivalent units of production = 104,745

Cost of beginning work in process inventory = $ 7,520
Costs added during the period = $202,500
Total cost (a) = $210,020
Equivalent units of production (b) = 104,745
Cost per equivalent unit (a) ÷ (b) = $2.0050