Question

Information concerning Department A of Ali Company for the month of June is as follows: Unit MaterialsCosts Work in process, beginning of month 20,000 $14,250 Started in June 85,000 $66,600 Units completed 90,000 Work in process, end of month 15,000 All materials are added at the beginning of the process. Using the average cost method, the cost (rounded to two places) per equivalent unit for materials is: Group of answer choices $0.75. $0.61. $0.77. $0.79.

Answer 1

The answer is $0.77

Step-by-step explanation:

Solution

Given that:

The Statement of equivalent production for direct materials:

Particulars Direct Material

% completed Units

Units completed 100% 90000

Ending Work in process 100% 15000

Therefore, the total Equivalent unit of Production is 105000

Now,

We find the statement of cost per equivalent unit:

Particulars Direct Material

Cost of beginning work in process inventory $14,250

Add: cost added during the month $66,600

Total Costs $80,850

Equivalent unit of Production 105000

cost per equivalent unit of production for materials is $0.77

Note: The total costs was divided with the Equivalent unit of Production

= $80.850/$105000

= $0.77