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1 January, 19:59

During July, the equivalent units of direct materials added to the product worked on by Department A amounted to a total of 90,000 applied as follows: beginning inventory, 20,000 units; units started and completed in July, 60,000 units; and ending inventory, 10,000 units. Assuming that the cost of direct materials requisitioned by the department in July was $135,000; the amount of the materials cost to be assigned to the ending inventory would be:

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  1. 1 January, 20:19
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    Cost of ending inventory = $15,000

    Explanation:

    Given:

    Direct material = 90,000

    beginning Inventory = 20,000

    Completed Inventory = 60,000

    Ending Inventory = 10,000

    Total cost of direct materials = $135,000

    Computation:

    Cost of ending inventory = Ending Inventory * Per Item cost

    Cost of ending inventory = 10,000 * $1.50

    Cost of ending inventory = $15,000

    Working Note:

    Cost per unit = Cost of direct materials / Units in direct materials

    Cost per unit = $135,000 / 90,000

    Cost per unit = $1.50
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