Question

Assume that direct material costs in beginning Work-in-Process Inventory is $500 and an additional $1,500 worth of materials is added during the month. Equivalent units for direct materials is 500 units. What is the cost per equivalent unit for direct materials?

Answer 1

Answer:

$4.00

Explanation:

Data provided:

Direct material costs in beginning Work-in-Process Inventory = $500

worth of materials is added during the month = $1,500

Equivalent units for direct materials = 500 units

Now,

the total cost incurred

= Direct material costs in beginning Work-in-Process Inventory + worth of materials is added during the month

= $500 + $1,500

= $2,000

Now,

The Cost per equivalent unit for direct materials

= $\frac{\textup{Total cost incurred}}{\textup{Equivalent units for direct materials}}$

The Cost per equivalent unit for direct materials  = $\frac{2000}{500}$

or

The Cost per equivalent unit for direct materials = $4.00