In: Accounting
The High Tide Company manufactures gadgets in a single process and uses the weighted average method of process costing. The following information is available:
Work in process inventory, Jan 1. 0 units
Units started in production 2,100 units
Units completed and transferred out 1,500 units
Work in process inventory, Dec. 31 600 units
Production costs:
Direct materials $2,871
Direct labor 2,498
Manufacturing overhead 5,767
The units still in process are:
80% complete with respect to direct materials
40% complete with respect to conversion costs.
What is the cost per equivalent unit for direct materials?
a. |
1.37 |
|
b. |
1.45 |
|
c. |
1.91 |
|
d. |
.69 |
Correct answer-----------(b) $1.45
Working
Reconciliation of Units | ||
A | Beginning WIP | - |
B | Introduced | 2,100 |
C=A+B | TOTAL | 2,100 |
D | Transferred out | 1,500 |
E=C-D | Ending WIP | 600 |
.
Statement of Equivalent Units(Weighted average) | |||||||
Material | Conversion | ||||||
Units | Complete % | Equivalent units | Complete % | Equivalent units | |||
Transferred out | 1,500 | 100% | 1,500 | 100% | 1,500 | ||
Ending WIP | 600 | 80% | 480 | 40% | 240 | ||
Total | 2,100 | Total | 1,980 | Total | 1,740 |
.
Cost per Equivalent Units (Weighted average) | ||||
COST | Material | Conversion | TOTAL | |
Beginning WIP Inventory Cost (A) | $ 0 | |||
Cost incurred during period (B) | $ 2,871 | $ 11,265 | $ 14,136 | |
Total Cost to be accounted for (C=A+B) | $ 2,871 | $ 11,265 | $ 14,136 | |
Total Equivalent Units(D) | 1,980 | 1,740 | ||
Cost per Equivalent Units (E=C/D) | $ 1.45 | $ 6.47 | $ 7.92 |