ECONOMICS

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COST ACCOUNTING

PROCESS COSTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Destry Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 10, 000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19, 200. An additional 60, 000 units were started into production during the month. There were 19, 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 $380, 060 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
A
$6.400
B
$6.334
C
$6.209
D
$4.811
Explanation: 

Detailed explanation-1: -Darvin Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20, 000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs.

Detailed explanation-2: -Fabian Corporation uses the weighted-average method in its process costing system.

Detailed explanation-3: -When the weighted-average method of process costing is used, a department’s equivalent units are computed by: Adding the units transferred out to the equivalent units in ending inventory. These will be the beginning work in Process for this period.

Detailed explanation-4: -In the weighted average cost method, the cost of goods available for sale is divided by the number of units available for sale and is commonly used when inventory items are so melded or identical to each other that it is impossible to assign specific costs to single units.

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