Question

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department:________.
Units:
Beginning Inventory: 30,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 120,000.
Units completed and transferred out: 150,000.
Ending Inventory: 32,500 units, 100% complete as to materials and 30% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $48,000.
Costs in beginning Work in Process - Conversion: $53,850.
Costs incurred in February - Direct Materials: $328,050.
Costs incurred in February - Conversion: $604,150.
Calculate the cost per equivalent unit of materials.
a. $2.06
b. $2.08
c. $1.78
d. $2.40
e. $2.69

Answer 1

Answer:

the cost per equivalent unit of materials is a. $2.06.

Explanation:

Step 1 : Calculate the total equivalent units of production for raw materials.

Units completed and transferred (150,000 × 100%)       = 150,000

Units in Ending Work in process (32,500 × 100%)          =  32,500

Total equivalent units of production for raw materials   = 182,500

Step 2 : Calculated the total raw material costs incurred during the period.

Raw material cost in Beginning Work in Process         =   $48,000

Add Raw Materials Cost Incurred during the period    = $328,050

Total raw material costs incurred                                   = $376,050

Step 3 : Calculate the cost per equivalent unit of materials.

Cost per equivalent unit = Total raw material costs incurred  ÷ Total equivalent units of production for raw materials

                                        = $376,050 ÷ 182,500

                                        = $2.06