The cost of direct materials transferred into the Rolling Department of Kraus Company is $3,000,000. The conversion cost for the period in the Rolling Department is $462,600. The total equivalent units for direct materials and conversion are 4,000 tons and 3,855 tons, respectively. Determine the direct materials and conversion costs per equivalent unit. Direct materials cost per equivalent unit: $ per ton Conversion cost per equivalent unit: $ per ton

(a) $750 per ton

(b) $120 per ton

Explanation:

Given that,

Cost of direct materials transferred = $3,000,000

Total equivalent units for direct materials = 4,000 tons

Conversion cost for the period = $462,600

Total equivalent units for conversion = 3,855 tons

Direct materials cost per equivalent unit:

= Cost of direct materials transferred : Total equivalent units for direct materials

= $3,000,000 : 4,000 tons

= $750 per ton

Conversion costs per equivalent unit:

= conversion cost for the period : Total equivalent units for conversion

= $462,600 : 3,855 tons

= $120 per ton