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2 November, 09:58

At the beginning of the month, the Painting Department of Skye Manufacturing had 30,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $38,650, consisted of $32,400 of material costs and $6,250 of conversion costs. During the month the department started 125,000 units and transferred 135,000 units to the next manufacturing department. Costs added in the current month consisted of $282,240 of materials costs and $544,700 of conversion costs. At the end of the month, the department had 20,000 units in inventory, 40% complete as to materials and 15% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.

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  1. 2 November, 10:05
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    Cost per equivalent unit of material = $2.20 per unit

    Cost per equivalent unit of conversion = $4 unit

    Explanation:

    The computation of Cost per equivalent unit of material, Cost per equivalent unit of conversion is shown below:-

    For computing the cost per equivalent first we need to find the equivalent unit of material which is below:-

    = Transferred units + (Department units * Material percentage)

    = 135,000 + (20,000 * 40%)

    = 135,000 + 8,000

    = 143,000

    So, the Cost per equivalent unit of material = (Beginning material cost + Current month material cost) : Equivalent unit of material

    = ($32,400 + $282,240) : 143,000

    = $314,640 : 143,000

    = $2.20 per unit

    Now, For computing the Cost per equivalent unit of conversion first we need to find the equivalent unit of conversion cost which is below:-

    = Transferred units + (Department units * Conversion percentage)

    = 135,000 + (20,000 * 15%)

    = 135,000 + 3,000

    = 138,000

    So, the Cost per equivalent unit of conversion = (Beginning conversion cost + Current month conversion cost) : Equivalent unit of conversion cost

    = ($6,250 + $544,700) : 138,000

    = $550,950 : 138,000

    = 3.99

    or $4 unit
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