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:

Production Department Rate

The Production Department Rate is a measure of efficiency in a production department, defined as the cost to produce one unit of product.

Overhead Application

The process of assigning manufacturing overhead costs to specific products or job orders based on a predetermined rate or method.

Cost Driver

A factor that causes a change in the cost of an activity or product.

Cost Allocation Process

The procedure of identifying, aggregating, and assigning costs to cost objects, such as products, services, or departments.