Kamin Company's mixing department had a beginning inventory of 4,000 units which had accumulated conversion costs of $55,000. During the period, the mixing department accumulated conversion costs of $92,000 and started 8,000 new units. Ending inventory was 2,500 units which were 40% complete with respect to conversion costs. Kamin uses the average cost method to cost inventories. Required: Calculate the cost per equivalent unit for conversion costs in the mixing department.

Question

Business

Jimena

28 October, 07:51

Kamin Company's mixing department had a beginning inventory of 4,000 units which had accumulated conversion costs of $55,000. During the period, the mixing department accumulated conversion costs of $92,000 and started 8,000 new units. Ending inventory was 2,500 units which were 40% complete with respect to conversion costs. Kamin uses the average cost method to cost inventories. Required: Calculate the cost per equivalent unit for conversion costs in the mixing department.

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India Watts · Answer 1

The cost per equivalent unit for conversion costs in the mixing department is $ 14.19

Explanation:

Step 1 Calculate the Number of Units Completed

Hint: Units input in process must equal units out of the process

Therefore Units Completed = 4,000 units+8,000 units - 2,500 units

= 9,500 units

Step 2 Calculate the total conversion cost in the process for the period

Hint : Conversion costs in Opening Work In Progress + Conversion Costs Started during the Process

Therefore:

Opening Work In Progress $55,000

Add Started during the Process $92,000

Total Conversion Costs $149,000

Step 3 Calculate total Equivalent Units related to Conversion Costs

Completed Units - 100% 9,500

Closing Work in Progress - 40% 1,000

Total 10,500

Step 4 The cost per equivalent unit for conversion costs in the mixing department

cost per equivalent unit for conversion costs = total conversion cost / total Equivalent Units

= $149,000 / 10,500

= $ 14.19