Abis Corporation uses the weighted-average method in its process-costing system.

Question

Abis Corporation uses the weighted-average method in its process-costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were

A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that's the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

Abis Corporation uses the weighted-average method in its process-costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were

Cost Percent Complete Material costs $6,000 50% Conversion costs $9,900 30%

A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Cost Material costs $113,900 Conversion costs $322,500

The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that's the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

10. The cost per equivalent unit for conversion costs for the first department for the month is closest to      A. $37.68. B. $33.24. C. $38.83. D. $40.77.

Explanation / Answer

There were 800 units in the beginning inventory, and 9200 were started. 800 + 9200 = 10,000. Of those 10,000, 8200 were completed and transferred out (8200 equivalent units). So, 1800 were left. The 1800 that were left were 20% complete for conversion costs. 1800*0.20 = 360 equivalent units. So the total equivalent units for conversion costs equal 8200 + 360 = 8,560.

Conversion costs in beginning inventory are 9,900. Conversion costs incurred during the month are 322,500. Total conversion costs = 9,900 + 322,500 = 332,400.

Conversion costs per equivalent unit for the first department for the month equals = 332,400/8,560 = $38.83.

Answer: C, $38.83.

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