Question

Dorchester Company, on March 1, 2019 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Dorchester started into production 16,500 units. At the end of the month there were 13,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 70% complete with respect to conversion. For the month of March the following costs were incurred and recorded in the WIP:

            Direct Material                      $21,000

            Direct Labor 12,000

            Factory Overhead 30,000

Dorchester uses the weighted-average process costing method. Use this information to determine the cost per equivalent unit of conversion for the month of March: (Round & enter final answers to the nearest cent.)

Answer 1

Dorchester has no beginning work in process inventory

Dorchester ending inventory

= Dorchester units started - units completed and transferred out

= 16,500 - 13,000 = 3,500 units

3,500 units in Dorchester ending inventory

Equivalent units of Dorchester in conversion

= (3,500 × 70%) + 13,000 = 15,450 units

Total cost of Dorchester conversion

= 30,000 + 12,000 = 42,000

Cost per equivalent unit of Dorchester in conversion

= 42,000 / 15,450 = 2.72

Cost per equivalent unit of conversion is $2.72