Question

Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish fillets for distribution to its retail sales department. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some fillets are spoiled due to undetectable defects. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2017 are as follows:

WIP, beginning inventory 4/1/2017                                   88,000 fillets

        Direct materials (100% complete)

        Conversion costs (60% complete)

Started during April                                                             140,000 fillets

Completed and transferred out 4/30/2017                     189,000 fillets

WIP, ending inventory 4/30/2017                                        23,000 fillets

        Direct materials (100% complete)

        Conversion costs (30% complete)

Costs for April:

        WIP, beginning Inventory:

                Direct materials                                                               $140,000

                Conversion costs 100,910

        Direct materials added 310,000

        Conversion costs added 384,130

What is the total cost per equivalent unit (direct materials and conversion costs combined) using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent.)

	a.	$1.97
	b.	$4.26
	c.	$2.29
	d.	$3.38

Answer 1

Solution:

Equivalent units of production (EUP) - Weighted Average Method
	Units	% Material	EUP - Material	% Conversion	EUP - Conversion
Units Completed and Transferred Out to Second Department	189000	100%	189000	100%	189000
Normal Loss	7560	100%	7560	100%	7560
Abnormal Loss	8440	100%	8440	100%	8440
Work In Process Inventory, April 30	23000	100%	23000	30%	6900
Total	228000		228000		211900
Cost per equivalent unit of production
			Materials		Conversion	Total
Cost related to beginning work in process			$140,000		$100,910
Cost incurred during the period			$310,000		$384,130
Total Costs		Costs	$450,000	Costs	$485,040
Equivalent Units of Production		EUP	228000	EUP	211900
Cost per Equivalent Unit of production			$1.97		$2.29	$4.26

The correct option is b. $4.26

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