Company uses the weighted-average method in its process costing system. The Packaging Department started the month with 290 units in process, started 1 comma 460 units, and had 120 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 40 % complete with respect to conversion costs. The department incurred the following costs: Beginning WIP Added this month TotalDirect Materials $700 $3,400 $4,100Conversion Costs 300 6,150 6,450Total $1,000 $9,550 $10,550The cost per equivalent unit for direct materials is? A. $2.56B. $7.30C. $5.93D. $2.30

Question

Ramiro Fowler

Business

28 October, 08:00

Company uses the weighted-average method in its process costing system. The Packaging Department started the month with 290 units in process, started 1 comma 460 units, and had 120 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 40 % complete with respect to conversion costs. The department incurred the following costs: Beginning WIP Added this month TotalDirect Materials $700 $3,400 $4,100Conversion Costs 300 6,150 6,450Total $1,000 $9,550 $10,550The cost per equivalent unit for direct materials is? A. $2.56B. $7.30C. $5.93D. $2.30

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Answers (1)

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Jordan Freeman · Answer 1

D) $2.30

Explanation:

since all materials are added at the beginning of the process, all units will be 100% complete relative to direct materials

equivalent units of production for direct materials = number of units in beginning work in process + units started during the month = 290 + 1,460 = 1,750

cost per equivalent unit for direct materials = total direct material cost / EUP for direct materials = $4,100 / 1,750 EUP = $2.34. The closest option is $2.30.