Question

In Mordica Company, total material costs are $36,000, and total conversion costs are $57,500. Equivalent units of production are materials 10,000 and conversion costs 12,000. Compute the unit costs for materials and conversion costs.

Answer 1

Answer:

Equivalent cost per unit of material=$3.6

Equivalent cost per unit of conversion cost=$4.75

Explanation:

Equivalent Units E.U) are notional whole units which represent incomplete work and are used to apportion costs between between work in progress and completed work.

Equivalent cost per unit of material = Total cost of each element/Total equivalent units

Material cost

                         

Equivalent cost per unit of material

                                    = $36,000/10,000 units

                                    =$3.6

Conversion cost

Equivalent cost per unit of conversion cost

                                                            =  $57,500/12,000

                                                             =$4.75