Question

During April, the production department of a process operations system completed and transferred to finished goods 31,000 units that were in process at the beginning of April and 88,000 units that were started and completed in April. April's beginning inventory units were 100% complete with respect to materials and 35% complete with respect to labor. At the end of April, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 45% complete with respect to labor. The beginning inventory included materials cost of $109,600 and the production department incurred direct materials cost of $336,800 during the month. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.
A) $5.07.
B) $3.75.
C) $2.26.
D) $3.83.
E) $3.00.

Answer 1

Answer:

E) $3.00.

Explanation:

The computation of direct materials cost per equivalent unit is shown below:-

Equiavent unit with respect to material = $31,000 + $88,000 + $30,000

= 149000 units

Total direct material cost = $109,600 + $336,800

= $446,400

Direct materials cost per equivalent unit = Total direct material cost ÷ Equiavent unit with respect to material

= $446,400 ÷ 149,000

= $3 per unit

So, we have applied the above formula.