Gilberto adds materials at the beginning of production and incurs conversion cos

Question

Gilberto adds materials at the beginning of production and incurs conversion cost uniformly throughout manufacturing. Consider the data that follow.

Conversion cost in the beginning work-in-process inventory totaled $170,000, and August conversion cost totaled $293,000. Assuming use of the weighted-average method, which of the following choices correctly depicts the number of equivalent units for materials and the conversion cost per equivalent unit?

Multiple Choice

Choice A

Choice B

Choice C

Choice D

Choice E

Units Beginning work in process 24,700           Started in August 61,300           Production completed 55,900           Ending work in process, 40% completed 30,100          

Explanation / Answer

Equivalent unit of material = 55900+(30100*100%) = 86000 units

Equivalent unit of conversion = 55900+(30100*40%) = 67940 units

Cost per equivalent unit of conversion cost = (170000+293000)/67940 = 6.81

so answer is option E

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