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Mickler Productions uses process costing. Its Mixing Department incurred conversion costs of $650,820 during January, and had a beginning Work in Process inventory of $30,430 for conversion costs. 54,000 units were transferred out of the department, and the ending inventory consisted of 2,500 units that are 20% complete with respect to conversion costs. What is the conversion cost per equivalent unit during January? $12.05 $12.62 $12.17 $12.50

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Answer:

$12.50

Explanation:

Calculation of Equivalent units of production with respect to conversion costs

Ending Work In Process (2,500 × 20%)                                               500

Completed and Transferred Out (54,000  × 100%)                        54,000

Equivalent units of production with respect to conversion costs 54,500

Calculation of the conversion cost per equivalent unit

cost per equivalent unit = Total Cost ÷ Total Equivalent Units

                                        = ($30,430 + $650,820) ÷ 54,500

                                        = $12.50

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