Question

EA14.

LO 5.4A production department within a company received materials of $10,000 and conversion costs of $10,000 from the prior department. It added material of $27,200 and conversion costs of $53,000. The equivalent units are 20,000 for material and 18,000 for conversion. What is the unit cost for materials and conversion?

Answer 1

$1.86; $3.5

Step-by-step explanation:

Total cost incurred:

= Cost received from departments + Addition of cost within its departments

= $10,000 + $27,200

= $37,200

Unit cost for materials:

= Total cost incurred ÷ equivalent units

= $37,200 ÷ 20,000

= $1.86

Total cost incurred:

= Cost received from departments + Addition of cost within its departments

= $10,000 + $53,000

= $63,000

Unit cost for Conversion:

= Total cost incurred ÷ equivalent units

= $63,000 ÷ 18,000

= $3.5