Thomas Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 10,000 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 $19,200. An additional 60,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $380,060 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month?

Cost per equivalent unit for conversion costs for the month = $6.21

Explanation:

The weighted average cost of valuation does not separate the opening inventory from the units newly introduced when accounting for completed units in a production period.

To determine the cost per equivalent units using Weighted Average Method, follow the steps below:

Step 1: Determine the equivalent Unit

Completed units = 10,000+  60,000-19000= 51000

Items                                      Workings            Equiva. Units

Completed units    51,000    (51000 *100%) =          51,000

Closing WIP            19,000     19,000 * 70%)          =  2,800

Total Equivalent units                                             64,300

Step 2 : calculate total conversion cost

= 19,200 + $380,060 = 399,260

Step 3 = Cost per Equivalent unit per conversion cost

Cost per unit = Total conversion cost/total Equivalent units

=399,260 /64,300

= $6.21

Cost per equivalent unit for conversion costs for the month = $6.21

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