Question

Darden Corporation uses the weighted-average method in the process costing system. The first processing department the Welding Department, started the month with 18,200 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $16,700. An additional 85,000 units were started into production during the month. There were 18,000 in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $837,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for the conversion costs for the month is closest to:

A: $8.738

B: $9.965

C: $9.200

D: $8.486

Answer 1

Unit transferred to next department = Units in beginning work in process + Units started in to production – Units in ending work in process

= 18,200 + 85,000 – 18,000 = 85,200

Equivalent units of production w.r.t conversion cost = Units transferred to next department + equivalent units in ending work in process

= 85,200 + 18,000 x 0.7 = 85,200 – 13,090 = 97,800

Computation of cost per equivalent units:

Cost of beginning work in process inventory	$   16,700
Cost added during the period	$ 837,880
Total cost (C)	$ 854,580
÷Equivalent units of production (n)	97,800
Cost per equivalent units	$   8.7380

Hence option “A. $ 8.738” is correct answer.