Question

During May, the number of equivalent units of materials applied to units produced by Department Q totaled 48,000, computed as follows: beginning inventory, 5,000 equivalent units; units started and completed in May, 37,000 equivalent units; and ending inventory, 6,000 equivalent units.

Refer to the information above. Assuming that the cost of direct materials used by Department Q in May was $440,000, the materials cost assigned to unfinished units at May 31 would be: Do not round intermediate calculations

$55,000.

$26,400.

$70,400.

Impossible to determine unless we know the percentage of completion for ending inventory units.

Answer 1

A. $55,000

Step-by-step explanation:

The question requires us to determine the material cost to be assigned to unfinished units at May 31-

The assumption: The cost of direct material used by Department Q IN May was $440,000

Solution:

Material Cost for unfinished units May 31st

= Assumed Cost of Direct Materials x (Equivalent units of ending inventory of Materials/ Equivalent Units of Materials applied to Units Produced by the Department for the Month )

= $440,000 x (6,000/48,000 units)

= $55,000