Question

During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. The production department incurred direct materials cost of $253,000 and its beginning inventory included materials cost of $93,500. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

Answer 1

$2.10

Step-by-step explanation:

The computation of the cost per equivalent unit for direct material is shown below:

= (Direct material cost + Beginning inventory cost) ÷ (equivalent units for the materials)

where,

Equivalent units would be

= Completed and transferred units + beginning work in progress units + additional units

= 25,000 + 110,000 + 30,000

= 165,000 units

And, all the other things would remain the same

= ($253,000 + $93,500) ÷ (165,000 units)

= $2.10

Since all the units are completed with 100% and we consider it same