Question

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department:

Units:

Beginning Inventory: 30,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 120,000.
Units completed and transferred out: 150,000.
Ending Inventory: 32,500 units, 100% complete as to materials and 30% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $48,000.
Costs in beginning Work in Process - Conversion: $53,850.
Costs incurred in February - Direct Materials: $328,050.
Costs incurred in February - Conversion: $604,150.

Required:
Calculate the cost per equivalent unit of materials.

Answer 1

Cost per equivalent unit of material = $2.06

Step-by-step explanation:

Total cost of material= Cost of material in beginning WIP + Cost of material incurred in February

= $48,000 + $328,050

= $376,050

Equivalent units = Number of units completed and transferred+ Ending inventory

= 150,000 units + 32,500 units

= 182,500 units

Cost per equivalent unit of material = Total cost of direct material / Equivalent units

= $376,050 / 182,500 units

= $2.06