Question

At the beginning of the month, the Painting Department of Skye Manufacturing had 28,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $36,650, consisted of $30,400 of material costs and $6,250 of conversion costs. During the month the department started 123,000 units and transferred 132,000 units to the next manufacturing department. Costs added in the current month consisted of $274,700 of materials costs and $542,520 of conversion costs. At the end of the month, the department had 19,000 units in inventory, 40% complete as to materials and 15% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.

A. $2.19; $4.07

B. $1.94; $3.99

C. $2.22; $4.20

D. $2.22; $3.99

E. $2.54; $4.25

Answer 1

Answer:

Determination of Equivalent unit of production & cost per equivalent units for material & conversion:

Particulars	Material	Conversion
In respect of units started & transferred to the next department:
: Material (132,000 Units x 100%)	132,000
: Conversion (132,000 Units x 100%)		132,000
In respect of Ending work in progress inventory:
: Material (19,000 Units x 40%)	7,600	2,850
: Conversion (19,000 Units x 15%)
Equivalent unit of production	139,600	134,850

Cost per Equivalent units of production in respect of Material:

= (Begnnig material cost + Material cost added during the period) / Equivalent unit of material

= ($30,400 + $274,700) / 139,600 Units

= $2.19 per unit

Cost per Equivalent units of production in respect of Conversion:

= (Begnnig conversioncost + Conversion cost added during the period) / Equivalent unit of conversion

= ($6,250 + $542,520) / 134,850 Units

= $4.07 per unit

Accordingly, Option (A) i.e. $2.19; $ $4.07 is the correct answer.