Question

During March, the production department of a process operations system completed and transferred to finished goods 23,000 units that were in process at the beginning of March and 170,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 70% complete with respect to labor. At the end of March, 28,000 additional units were in process in the production department and were 100% complete with respect to materials and 70% complete with respect to labor. The production department incurred direct materials cost of $254,800 and its beginning inventory included materials cost of $94,100. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.
a. $1.37.
b. $2.05.
c. $1.58.
d. $1.50.
e. $1.81.

Answer 1

Answer:

c. $1.58.

Explanation:

The computation of the direct materials cost per equivalent unit is given below:

Equivalent units for material is

= 100% of 193,000 + 100% of 28,000

= 193,000 + 28,000

= 221,000

Equivalent cost for material is

= $94,100 + $254,800

= $348,900

So, the direct materials cost per equivalent unit is

= $348,900 ÷ 221,000

= $1.58