Question

Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department:

Units:Beginning Inventory: 90,000 units, 70% complete as to materials and 20% complete as to conversion.Units started and completed: 270,000.Units completed and transferred out: 360,000.Ending Inventory: 35,000 units, 40% complete as to materials and 15% complete as to conversion.Costs:Costs in beginning Work in Process - Direct Materials: $47,200.Costs in beginning Work in Process - Conversion: $89,700.Costs incurred in October - Direct Materials: $759,920.Costs incurred in October - Conversion: $929,300.Calculate the cost per equivalent unit of materials.
a. $2.80b. $2.50c. $2.04d. $2.36e. $2.16

Answer 1

e. $2.16

Step-by-step explanation:

Richards Corporation

Weighted-Average Method

Fabricating Department:

Particulars Units % of Completion Equivalent Units

Materials Conversion Materials Conversion

Completed &

transferred out: 360,000 100 100 360,000 360,000

Ending Inv: 35,000 40% 15% 14000 5250

Equivalent Units 374,000 365250

Costs Direct Materials Conversion

Beg. Work in Process - : $47,200 $89,700

Costs incurred in October - $759,920 $929,300

Total Costs 807,120 1,019,000

Cost Per Equivalent Unit = Total Costs/ Equivalent Units

Cost Per Equivalent Unit Materials = 807120/ 374,000= $ 2.158 ≅$ 2.16

We divide the total costs of Materials with the total Equvilant units of Materials to get Cost Per Equivalent Unit of Materials which is 2.16