Paceheco Company Uses the Weighted-Average Method in Its Process Costing

question 43

Multiple Choice

Paceheco Company uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarise the department's operations in January. $\begin{array}{lrr}&&\text {Percent}\\&\text { Units}&\text { complete }\\ \text { Beginning work in process stock } &5,100&70 \%\\ \text {Transferred in from the prior department during January. } &59,000\\\text { Completed and transferred to the next department during } &56,000\\ \text { January } &56,800\\ \text { Ending work in process stock.} &7,300&40\%\\\end{array}$

The accounting records indicate that the conversion cost that had been assigned to beginning work in process stock was £34,558 and a total of £559,254 in conversion costs were incurred in the department during January.
What was the cost per equivalent unit for conversion costs for January in the Molding Department? (Round off to three decimal places.)

• A)£9.479
• B)£9.943
• C)£9.680
• D)£8.435

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Definitions:

Net Operating Income

Income from a company's everyday business operations, excluding expenses from interest and taxes.

Monthly Sales

The total revenue generated from the sale of goods or services within a single month.

Advertising Budget

The amount of money a company decides to allocate towards advertising its products or brand over a certain period.

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in a business.