Question

Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. The company uses Weieghted Average Method.
Data for Department A for February 2015 are:

WIP, beginning inventory, 40% completed 200 units

Units started during February 800 units

WIP, ending inventory, 50% completed 100 units

Costs for Department A for Feburary 2015 are:

WIP, beginning inventory:

Direct Materials $150,000

Conversion Costs 200,000

Direct Materials costs added during February 600,000

Conversion costs added during February 425,000

What is the unit cost per equivalent unit of direct materials in Department A?

Answer 1

Answer: $3,250

Explanation:

DATA FOR DEPARTMENT A for February 2015 are:

WIP, beginning inventory, 40% completed 200 units

Units started during February 800 units

WIP, ending inventory, 50% completed 100 units

COST FOR DEPARTMENT A for Feburary 2015 are:

WIP, beginning inventory:

Direct Materials $150,000

Conversion Costs 200,000

Direct Materials costs added during February 600,000

Conversion costs added during February 425,000

THE UNIT COST PER EQUIVALENT UNIT of beginning inventory in Department A is:

---------------------------------mat----conv--------total

No of physical unit-----200 - - 200

% completed - - - - - - -100% - -40%

Equivalent unit Beg.

Inventory - - - - - - - - - 200------ 80

Total cost of Beg.

Inventory - - - - - -150,000--- 200,000

Cost per equivalent

Unit - - - - - - - - - - - $750 - - - - $2500 - - $3,250