Question

Inacio Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:
Units in beginning work in process inventory		1,400
Materials costs	$	13,500
Conversion costs	$	5,600
Percent complete with respect to materials		75	%
Percent complete with respect to conversion		20	%
Units started into production during the month		10,100
Units transferred to the next department during the month		9,000
Materials costs added during the month	$	172,600
Conversion costs added during the month	$	242,600
Ending work in process inventory:
Units in ending work in process inventory		2,500
Percent complete with respect to materials		90	%
Percent complete with respect to conversion		30	%

The cost per equivalent unit for materials for the month in the first processing department is closest to:

Multiple Choice

$14.78

$15.09

$16.03

$16.54

Answer 1

Calculation of equivalent units completed
Particulars	No of units	materials		conversion costs
		%	Units	%	Units
Beginning inventory	1,400	75%	1,050	20%	280
Beginning inventory processed during the period	1,400	25%	350	80%	1,120
Units completed and transferred to next unit (9,000-1,400)	7,600	100%	7,600	100%	7,600
Closing stock	2,500	90%	2,250	30%	750
Weighted average Equivalent units processed (A)			11,250		9,750
Opening stock balance			13,500		5,600
Costs incurred			1,72,600		2,42,600
Total (B)			1,86,100		2,48,200
Weighted average cost per unit (B/A)			16.54		25.46
Ans) cost per equivalent unit $16.54 (Option (D) is correct)