Question

Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. During the month 100,000 units were started. At the end of the month all started units were 80% complete with respect to conversion. Direct Materials placed into production had a total cost of $24,000 and the total conversion cost for the month was $16,000. Alpha uses the weighted-average process costing method. Use this information to determine for the month of March: (Round & enter final answers to the nearest penny.) 1. the cost per equivalent unit of direct material 2. the cost per equivalent unit of conversion

Answer 1

1. $0.24 per unit

2. $0.20 per unit

Step-by-step explanation:

1. The computation of cost per equivalent unit of direct material is given below:-

Here, material is at the beginning, so it will equals to 100%. Now the equivalent units for material will be completed units + closing Work in progress

= 100,000 units

Conversion cost = (Units completed × 100%) + (Closing Work in progress × 80%)

= (0 × 100%) + (100,000 × 80%)

= 80,000 units (no unit is completed)

Equivalent cost per unit = Cost involved ÷ Equivalent units

= $24,000 ÷ 100,000 units

= $0.24 per unit

Conversion cost = Total conversion cost ÷ Conversion cost

= $16.000 ÷ 80,000 units

= $0.20 per unit