Question

A department adds all materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in process; 40600 units were completed and transferred out; and there were 20000 units in the ending work in process that were 30% complete. During July, $96960 materials costs and $97860 conversion costs were charged to the department.

The unit production costs for materials and conversion costs for July was _______.

Answer 1

The unit costs for materials is $1.62 per unit

The unit costs of conversion costs is $2.13 per unit

Step-by-step explanation:

In determining the the unit production costs for materials and conversion costs, it is very important to calculate equivalent number of units applicable to materials as well as the one applicable to conversion costs

Equivalent units for materials

Completed units 40000 @100% complete 40000

Ending inventory 20000@ 100% complete 20000

60000

Equivalent units for conversion costs

Completed units 40000@100% 40000

Ending inventory 20000 @ 30% complete 6000

46000

unit production costs of materials=$96960/60000=$1.62 per unit

unit production costs of conversion costs=$97860/46000=$2.13 per unit