Question

A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 54,800 units, 75% complete with respect to direct labor and overhead. The department completed and transferred out 115,500 units this period. The ending inventory consists of 44,800 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $36,000 and overhead costs of $44,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:

Answer 1

Answer:

$0.28/EUP

Explanation:

Calculation for the direct labor cost per equivalent unit (rounded to the nearest cent) is:

First step is to calculate the Total EUP's

Completed and transferred out 115,500

Add EGIP $11,200

(44,800 * 25%)

Total EUP's $126,700

Now let calculate direct labor cost per equivalent unit using this formula

Direct labor cost per equivalent unit=Cost / Eup

Let plug in the formula

Direct labor cost per equivalent unit=($36,000/$126,700)

Direct labor cost per equivalent unit=$0.28/EUP

Therefore Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:$0.28/EUP