Question

Jameson's Manufacturing Inc.'s debits to Work in Process-Assembly Department for July, together with data concerning production, are as follows:

July 1, work in process:
Materials cost, 3,000 units $ 8,000
Conversion costs, 3,000 units, 66.7% completed 6,000
Materials added during July, 10,000 units 30,000
Conversion costs during July 31,000
Goods finished during July, 11,500 units 0
July 31 work in process, 1,500 units, 50% completed 0
​​All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for July is:__________.
A. $3.00
B. $3.80
C. $2.92
D. $2.31

Answer 1

Option A is correct

Cost per equivalent unit for material - $3

Step-by-step explanation:

Cost per equivalent unit = Total direct material cost / Total equivalent unit

Equivalent units of materials

Item Equivalent unit

Opening inventory 3000×0% = 0

Fully worked 8,500× 100% = 8,500

Closing inventory 1,500 ×100%= 1,500

Total equivalent units 10,000

Notes:

Fully worked represent the units started and completed in July

Fully worked = newly introduced units in July - Closing inventory in July

Fully worked = 10,000 -1500 = 8,500

Cost per equivalent unit = Total direct material cost / Total equivalent unit

= 30,000/10,000=$3

Cost per equivalent unit for material =$3