Question

In Waterway Company, total materials costs are $40,000, and total conversion costs are $53,520. Equivalent units of production are materials 10,000 and conversion costs 12,000. Compute the unit costs for materials and conversion costs.

Answer 1

To calculate unit costs for materials and conversion costs in Waterway Company, divide the total costs by equivalent units of production for each. The unit cost for materials is $4.00 per unit, and the unit cost for conversion costs is $4.46 per unit.

Step-by-step explanation:

The unit costs for materials and conversion costs in Waterway Company can be calculated by dividing the total costs of each by their respective equivalent units of production. To find the unit cost for materials, divide the total materials costs of $40,000 by the equivalent units of production for materials, which is 10,000.

Similarly, the unit cost for conversion costs can be found by dividing the total conversion costs of $53,520 by the equivalent units of production for conversion, which is 12,000.

Calculation for materials:

Unit cost for materials = Total materials costs / Equivalent units of production for materials

Unit cost for materials = $40,000 / 10,000

Unit cost for materials = $4.00 per unit

Calculation for conversion costs:

Unit cost for conversion costs = Total conversion costs / Equivalent units of production for conversion

Unit cost for conversion costs = $53,520 / 12,000

Unit cost for conversion costs = $4.46 per unit