Question

Analyzing changes in unit costs The costs of materials consumed in producing good units in the Forming Department of Thomas Company were $76,000 and $77,350 for September and October, respectively. The number of equivalent units produced in September and October was 800 tons and 850 tons, respectively. Evaluate the change in the cost of materials between the two months.

Material cost per ton, September
Material cost per ton, October
The cost of materials _______ by $ ______ per ton between September and October.

Answer 1

Answer and Explanation:

The computation of the material cost per ton month wise is as follows:

Cost per unit in September

= $76,000 ÷ 800 units

= $95 per unit

ANd, Cost per unit in October is

= $77,350 ÷ 850 tons

= $91 per unit

As we can see that the cost per unit would reduced by $4 per unit that comes from

= $95 - $91

= $4