Question

During January, the production department of a process operations system completed and transferred to finished goods a total of 90,000 units. At the end of January, 18,000 additional units were in process in the production department and were 50% complete with respect to labor. The beginning inventory included labor cost of $37,400 and the production department incurred direct labor cost of $296,700 during January. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

Answer 1

$3.37

Step-by-step explanation:

Computation for the direct labor cost per equivalent unit for the department using the weighted-average method.

First step is to calculate the Equivalent units

EUP and cost per EUP DL

Completed and transferred 90,000

(90,000 * 100%)

Ending Work in Process

Direct labor 9,000

( 18,000 * 50% )

Equivalent units 99,000

(99,000+9000)

Second step is calculate the total cost

Costs of beginning inventory $37,400

Costs incurred this period 296,700

Total costs $334,100

Now let determine the Cost per equivalent unit

Using this formula

Cost per equivalent unit=Total costs/Equivalent units

Cost per equivalent unit $334,100/99,000

Cost per equivalent unit=$3.37

Therefore the direct labor cost per equivalent unit for the department using the weighted-average method is $3.37