Question

At Hodgson Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Beginning WIP direct materials Beginning WIP conversion costs Costs of materials added Costs of conversion added WIP beginning (50% for conversion) Units started Units completed and transferred out WIP ending (60% for conversion) $32,000 $32,000 $384,100 $387,100 28,200 units 129,500 units 108,700 units 49,000 units What is the cost per equivalent unit for conversion costs? O A. $2.66 O B. $2.80 O C. $3.41 O D. $3.03

Answer 1

Correct answer---------(D) $3.03

Working

Reconciliation of Units
A	Beginning WIP	28,200
B	Introduced	129,500
C=A+B	TOTAL	157,700
D	Transferred out	108,700
E=C-D	Ending WIP	49,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	108,700			100%	108,700	100%	108,700
Ending WIP	49,000			100%	49,000	60%	29,400
Total	157,700			Total	157,700	Total	138,100

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 32,000	$ 32,000	$ 64,000
Cost incurred during period		$ 384,100	$ 387,100	$ 771,200
Total Cost to be accounted for		$ 416,100	$ 419,100	$ 835,200
Total Equivalent Units		157,700	138,100
Cost per Equivalent Units		$                   2.64	$                     3.03	$                5.67