Answer:
1. Cost per equivalent unit of direct material = $4
2. Cost per equivalent unit of conversion = $13.33
Note: In case it is stated for 5,000 units then cost will be $8 per unit but that is basic calculation.
3. Cost per unit transferred to finished goods = $17.33
Explanation:
In weighted average production method there is average of all the things
Since opening inventory of work in process = 0
Therefore entire production cost will be distributed
Provided total , and WIP will be as follows
Direct Material = $20,000
Direct Labor = $8,000
Factory Overhead = $32,000
WIP are 60 % complete with respect to conversion cost.
Now conversion cost comprises labor cost and manufacturing overhead cost.
For material it will be 100% complete as material is already brought in
Now using weighted average we have following as value of complete units
Raw material = $20,000 X 100% = $20,000
Labor = $8,000 / 60% = $13,333.33
Factory Overhead = $32,000 / 60% = $53,333.33
1. Cost per equivalent unit of direct material = $20,000/5,000 = $4
2. Cost per equivalent unit of conversion = ($8,000 + $32,000)/(5,000 units X 60%) = $40,000/3,000 units = $13.33, in case it is stated for 5,000 units then it will be $8 per unit.
3. Cost per unit transferred to finished goods = Total cost of finished goods/Number of finished goods
Total cost of finished goods = $20,000 + $13,333.33 + $53,333.33
= $86,666.67/5,000 units = $17.33
