Question

The cost of direct materials transferred into the Bottling Department of Mountain Springs Water Company is $538,900. The conversion cost for the period in the Bottling Department is $592,000. The total equivalent units for direct materials and conversion are 31,700 and 7,400, respectively. Determine the direct materials and conversion cost per equivalent unit.

Answer 1

Answer: 17 per unit; 80 per unit

Explanation:

From the question, we are informed that the cost of direct materials transferred into the Bottling Department of Mountain Springs Water Company is $538,900 and that the conversion cost for the period in the Bottling Department is $592,000 while the total equivalent units for direct materials and conversion are 31,700 and 7,400, respectively.

The direct materials cost per equivalent unit will be the cost of direct materials that is transferred into the Bottling Department of Mountain Springs Water Company which is $538,900 divided by the total equivalent units for direct materials which is 31700. This will be:

= $538,900/31700

= 17 per unit

The conversion cost per equivalent unit will be the conversion cost for the period in the Bottling Department which is $592,000 divided by the total equivalent units for conversion which is 7,400. This will be:

= $59200/7400

= 80 per unit