Question

At Hodgson​ Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details​ include: Beginning WIP direct materials $ 38 comma 000 Beginning WIP conversion costs ​$20,250 Costs of materials added $ 393 comma 100 Costs of conversion added ​$271,125 WIP beginning​ (50% for​ conversion) 20 comma 200 units Units started 120 comma 500 units Units completed and transferred out 106 comma 700 units WIP ending​ (60% for​ conversion) 34 comma 000 units What is the cost per equivalent unit for direct​ materials? (Round your final answer to the nearest​ cent.)

Answer 1

$2.79 per unit

Step-by-step explanation:

Given that :

Beginning WIP direct materials $ 38, 000

Beginning WIP conversion costs ​$20,250

Costs of materials added $ 393, 100

Costs of conversion added $271,125

WIP beginning​ (50% for​ conversion) 20,200 units

Units started 120,500 units

Units completed and transferred out 106,700 units

WIP ending​ (60% for​ conversion) 34,000 units

We are to find the cost per equivalent unit for direct​ materials? (Round your final answer to the nearest​ cent.)

Let first calculate the total equivalent units for direct materials which is:

= Units completed and transferred out + WIP ending

= (106,700 + 34000) units

= 140700 units

The cost per equivalent unit for direct​ materials = Costs of materials added (a)/ equivalent number of unit (b)

The cost per equivalent unit for direct​ materials = $ 393, 100/140700 unit

The cost per equivalent unit for direct​ materials = $2.79 per unit