Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs follow. Beginning work in process: Materials, $60,000; conversion cost, $150,000 Current costs: Materials, $180,000; conversion cost, $480,000 Universal's equivalent-unit cost for conversion cost is:

Universal Manufacturing

Equivalent unit cost for conversion cost is $18.

Explanation:

a) Data and Calculations:

Beginning work in process = 10,000 units

Ending work in process = 15,000 units

Units started = 30,000 units

Units completed = 25,000 units

Cost of:              Materials       Conversion

Beginning WIP   $60,000        $150,000

Current costs     180,000          480,000

Equivalent units of production:  Materials Degree       Conversion  Degree

Units started and completed      25,000     100%          25,000        100%

Ending WIP                                   15,000      100%          10,000         2/3

Total equivalent unit                   40,000                        35,000

Total cost of production:

Cost of:              Materials       Conversion

Beginning WIP   $60,000        $150,000

Current costs     180,000          480,000

Total cost        $240,000       $630,000

Cost per equivalent unit:

                                      Materials       Conversion   Total cost

Total cost                      $240,000       $630,000   $870,000

Total equivalent unit         40,000           35,000

Cost per equivalent unit   $6                  $18

b) Using the weighted average method, the costs in beginning inventory and current period costs are added and divided by the equivalent units of materials and conversion costs in order to establish an equivalent unit cost.  The equivalent cost per unit in process costing describes the average unit cost for each product.

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