Question

A company uses the weighted average method for inventory costing. At the start of a period the production department had 34,000 units in beginning Work in Process inventory which were 47% complete; the department completed and transferred 172,000 units. At the end of the period, 29,000 units were in the ending Work in Process inventory and are 82% complete. The production department had conversion costs in the beginning goods is process inventory of $106,000 and total conversion costs added during the period are $727,000. Compute the conversion cost per equivalent unit.

Answer 1

equivalent cost per unit = Total cost in beginning WIP+ conversion costs added during the period / equivalent units

Equivalent units

Beginning+started during period = COmpleted and transferred+ending

34,000+ started = 172,000+29,000

Started during teh period = 167,000

	%completed
Beginning WIP	53%[1-0.47]	18,020[34,000(1-0.47)]
Started during the period	100%	167,000
Ending WIP	82%	23,780[29,000*82%]
	Equivalent unit	208,800

equivalent cost per unit = ($106,000+$727,000)/208,800

=$3.99 per unit (round off as required)

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