Question

A company uses a process costing system. its assembly department's beginning inventory consisted of 52,400 units, 75% complete with respect to direct labor and overhead. the direct labor beginning inventory costs were $9,500. the department completed and transferred out 121,500 units this period. the ending inventory consists of 42,400 units that are 25% complete with respect to direct labor and overhead. all direct materials are added at the beginning of the process. the department incurred direct labor costs of $30,000 and overhead costs of $38,000 for the period. assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:

Answer 1

Total transferred units = 121,500
Direct labor costs = $30,000
Completed unit from the ending inventory = 42,400 x 25% = 10600
Now the total units transferred = 121,500 + 10600 = 132100
Direct labor cost per equivalent unit = Direct labor costs / total units transferred
= 30,000 / 132100 = 0.227
Direct labor cost per equivalent unit = 0.23.