Question

Annenbaum Corporation uses the weighted-average method in its process costing system.

This month, the beginning inventory in the first processing department consisted of 1,000 units. The costs and percentage completion of these units in beginning inventory were:

Cost Percent Complete
Materials costs $6,300 65%
Conversion costs $7,400 45%

A total of 7,700 units were started and 6,500 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Cost
Materials costs $126,100
Conversion costs $207,600

The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs.
The cost per equivalent unit for materials for the month in the first processing department is closest to:

a) $15.46 b) $17.42 c) $16.06 d) $14.64

Answer 1

The cost per equivalent unit for materials for the month in the first processing department is closest to b) $17.42

Step-by-step explanation:

First Step

First Calculate the Units of Closing Work In progress.

We Know that the units coming IN the progress should equal units coming OUT of the process

Therefore Units of Closing Work In Progress is = 7000+1000-6500 = 1500

Second Step

Then Secondly Calculate the Total Cost of Raw Materials in the process based on WEIGHTED AVERAGE METHOD.

Therefore Cost of Raw Materials = 6300+126100=132400

Third Step

Calculate Total Equivalent Production Units of Both Completed and Transferred and Closing Work In Progress Units

Therefore Total Equivalent Production Units = 6500×100%+1500×50%=7250

Finally

Calculate Cost per equivalent unit for materials

Cost per equivalent unit=Total Cost of Raw Materials $ 132,400/Total Equivalent Production Units 7,250 = $18.26

Therefore The cost of $18.26 is closest to b) $17.42