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 15,500 units. At the end of the month there were 10,000 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                      $26,000

            Direct Labor 17,000

            Factory Overhead 25,000

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

Cost per equivalent unit of conversion for the month of March = $3.03 per unit

Explanation:

Units completed and transferred out = 10,000 units

Units of ending WIP = 15,500 units - 10,000 units = 5,500 units

Equivalent units for conversion = (Units completed and transferred out * 100 %) + (Units of ending WIP * 70 %)

= (10,000 units * 100 %) + (5,500 units * 70%) = 13,850 units

Total conversion cost = Direct Labor + Factory Overhead =  17,000 + 25,000 = $42,000

Cost per equivalent unit of conversion for the month of March = Total conversion cost / Equivalent units for conversion
= $42,000 / 13,850 units = $3.03 per unit