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25 February, 13:38

Darden Corporation uses the weighted-average method in its 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 units 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 conversion costs for the month is closest to:

Multiple Choice

$8.486

$9.965

$8.738

$9.200

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Answers (1)
  1. 25 February, 13:51
    0
    Correct answer is 8.738

    Explanation:

    Unit transferred out

    = Beginning wip+unit started-ending wip

    = 18200+85000-18000

    Unit transferred out = 85200 unit

    Equivalent unit

    = Units transferred out+Ending inventory*percent completion

    = 85200 + (18000*70%)

    Equivalent unit = 97800 units

    cost per equivalent unit of conversion cost

    = Total cost/equivalent unit

    = (16700+837880) / 97800

    Cost per equivalent unit of conversion cost = 8.738
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