Darden Corporation uses the weighted-average method in its process costing syste

Question

Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 22,000 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 $26,200. An additional 104,000 units were started into production during the month. There were 37,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $856,880 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

$12.286

$13.000

$7.686

$10.003

Explanation / Answer

Units transferred to other department = opening WIP + Units introduced - closing WIP

=22000+ 104000-37000

= 89000

Calculation of equivalent units with regard to conversion cost

Units trans cost ferred to other department + equivalent units of closing wip

= 89000+ (37000×70%)

=114900

Calculation of total conversion cost

Cost of beginning WIP + cost added during the year

= 26200+ 856880

=883080$

Calculation of conversion cost per unit

=Total cost/ equivalent units

= 883080/114900

=$7.686

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