Question

Callahan Company uses the weighted-average method in its process costing system. The Packaging Department started the month with 290 units in process, started 1,490 ?units, and had 180 units in process at the end of the period. All materials are added at the beginning of the process, and conversion costs are incurred uniformly. The units in process at the end of the month are 10% complete with respect to conversion costs. During the month 1,600 units were completed and transferred out. The department incurred the following costs:______.
Beginning WIP Added this month Total
Direct Materials $700 $3,400 $4,100
Conversion Costs 300 6,150 6,450
Total $1,000 $9,550 $10,550
The cost per equivalent unit for direct materials is:_______ (Round your answer to two decimal places.)
A. $2.56
B. $7.30
C. $5.93
D. $2.30

Answer 1

Answer:

D. $2.30

Explanation:

The calculation of the cost per equivalent unit for direct material is given below:

= Total material cost ÷ Equivalent unit of materials

where,

Total material cost is $4,100

And, the equivalent unit of material is

= Units transferred out + ending work in process units

= 1,600 + 180

= 1,780

The units transferred out is come from

= Beginning units + started units - ending units

= 290 units + 1,490 units - 180 units

= 1,600 units

Therefore, the cost per equivalent for direct material is

= $4,100 ÷ 1,780 units

= $2.30