Ego Manufacturing produces a pesticide chemical and uses process costing. There
ID: 2338432 • Letter: E
Question
Ego Manufacturing produces a pesticide chemical and uses process costing. There are three processing
departmentslong dash—Mixing,
Refining, and Packaging. On January 1, the Refining Department had
3 comma 0003,000
gallons of partially processed product in production. During January,
33 comma 00033,000
gallons were transferred in from the Mixing Department, and
29 comma 00029,000
gallons were completed and transferred out. At the end of the month, there were
7 comma 0007,000
gallons of partially processed product remaining in the Refining Department. See additional details below.
Refining Department, beginning balance at January 1
Quantity:
3 comma 0003,000
units (partially processed)Cost:
$ 15 comma 600$15,600
of costs transferred in
$ 4 comma 500$4,500
of materials cost
$ 1 comma 800$1,800
of conversion cost
21 comma 90021,900
total account balance
Costs added during January
Cost of units transferred in $ 222 comma 400$222,400
Direct materials cost $ 93 comma 750$93,750
Conversion cost $ 45 comma 000$45,000
Refining Department, ending balance at January 31
Quantity:
7,000
units (partially processed)Percent complete for materials cost:
85%
Percent complete for conversion cost:
70%
What was the cost per equivalent unit with respect to conversion costs for the Refining Department in the month of January? (Use the
weightedminusaverage
method, and round your calculations to the nearest cent.)
Explanation / Answer
Answer
Reconciliation of Units
A
Opening WIP
3,000
B
Introduced
33,000
C=A+B
TOTAL
36,000
D
Transferred
29,000
E=C-D
Closing WIP
7,000
Statement of Equivalent Units
Cost Transferred
Material
Conversion Cost
Units
Complete %
Equivalent units
Complete %
Equivalent units
Complete %
Equivalent units
Transferred
29,000
100%
29,000
100%
29,000
100%
29,000
Closing WIP
7,000
100%
7,000
85%
5,950
70%
4,900
Total
36,000
Total
36,000
Total
34,950
Total
33,900
Cost per Equivalent Units
COST
Cost Transferred
Material
Conversion Cost
TOTAL
Beginning WIP Inventory Cost
$ 15,600.00
$ 4,500.00
$ 1,800.00
$ 21,900.00
Cost incurred during period
$ 222,400.00
$ 93,750.00
$ 45,000.00
$ 361,150.00
Total Cost to be accounted for
$ 238,000.00
$ 98,250.00
$ 46,800.00
$ 383,050.00
Total Equivalent Units
36,000
34,950
33,900
Cost per Equivalent Units
$ 6.61
$ 2.81
$ 1.38 = ANSWER
Cost per Equivalent unit for CONVERSION COST = $ 1.38 per unit
Reconciliation of Units
A
Opening WIP
3,000
B
Introduced
33,000
C=A+B
TOTAL
36,000
D
Transferred
29,000
E=C-D
Closing WIP
7,000
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