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

Question

Harker Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 24,000 units in its beginning work in process Inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process Inventory was $44,940. An additional 94,000 units were started into production during the month and 89,000 units were completed in the Welding Department and transferred to the next processing department. There were 29,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $679,300 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: O $7.881 O $5.877 O $8.069 O$7.227

Explanation / Answer

a. Total Conversion Cost incurred by the Welding Department

b. Equivalent Units of Production

Opening WIP Inventory

(which was 30% complete & remaining would be completed this month)

Units completed during this month

(= Units transferred to next department - Opening WIP inventory)

= 89000 - 24000

Now. Conversion costs per equivalent unit = Total Conversion Costs as per a / Total Equivalent units as per b

= $724240 / 91900

= $7.881

Particulars Amount (in$) Conversion Costs incurred towards beginning work in process inventory 44940 Costs incurred during the month 679300 TOTAL CONVERSION COST 724240

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