Question

During July, the production department of a process operations system completed and transferred to finished goods 10,000 units that were in process at the beginning of July and 76,000 that were started and completed in July. July's beginning inventory units were 100% complete with respect to materials and 30% complete with respect to labor. At the end of July, 15,000 additional units were in process in the production department and were 100% complete with respect to materials and 25% complete with respect to labor. The beginning inventory included labor cost of $52,100 and the production department incurred direct labor cost of $450,750 during July. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

Answer 1

Answer:

5.602786

Explanation:

Units completed:

= 100% of (76,000 + 10,000)

= 86,000

Closing units:

= 25% of 15,000

= 3,750

Equivalent units = Units completed + Closing units

                           = 86,000 + 3,750

                           = 89,750

Opening cost = 52,100

Cost during the year = 450,750

Total cost = Opening cost + Cost during the year

                = 52,100 + 450,750

                = 502,850

Direct labor cost per equivalent unit:

= Total cost ÷ Equivalent units

= 502,850 ÷  89,750

= 5.602786