Question

During March, the production department of a process operations system completed and transferred to finished goods 35,000 units that were in process at the beginning of March and 190,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 50% complete with respect to labor. At the end of March, 27,000 additional units were in process in the production department and were 100% complete with respect to materials and 70% complete with respect to labor. The production department incurred direct materials cost of $255,300 and its beginning inventory included materials cost of $94,200. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

Answer 1

cost per equivalent unit for direct materials is $1.39.

Step-by-step explanation:

First, calculation of equivalent units of production with respect to Direct materials

Closing Work In Process (27,000 × 100%) = 27,000

Completed and Transferred (225,000 × 100%) = 225,000

Equivalent units of Production with respect to Direct materials = 252,000

Then calculate the cost per equivalent unit for direct materials as follows :

Cost per equivalent unit = Total Costs ÷ Total Equivalent units

= ($255,300 + $94,200) ÷ 252,000

= $1.39