Question

Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 2,200 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete Materials costs $ 7,300 50% Conversion costs $ 3,500 20% A total of 8,600 units were started and 7,900 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Cost Materials costs $ 160,500 Conversion costs $ 122,200 The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs. The cost per equivalent unit for materials for the month in the first processing department is closest to:

Answer 1

Answer: $16.19

Explanation:

Equivalent Units = Units completed and transferred + Ending Inventory completed

Ending Inventory = Beginning inventory + Units started into production - Units transfered to second processing department

= 2,200 + 8,600 - 7,900

= 2,900 units

Equivalent Units = 7,900 + (2,900 * 85%)

= 10,365 units

Cost per equivalent unit = Total Material Cost / Equivalent Units

= ( Beginning material cost + Material cost incurred during the month) / Equivalent Units

= (7,300 + 160,500) / 10,365

= $16.19