Black Company uses the weighted-average method in its process costing system.The company's ending work-in-process inventory consists of 5,000 units,80% complete with respect to materials and 50% complete with respect to labour and overhead.If the total dollar value of the inventory is $60,000 and the cost per equivalent unit for labour and overhead is $8.00,what is the cost per equivalent unit for materials?
A) $5.00.
B) $10.00.
C) $8.00.
D) $4.00.Material cost in inventory = $60,000 - $20,000 = $40,000

Question

Quizplus · Accepted Answer

The total cost of $60,000 includes both materials and conversion costs (labour and overhead). The conversion cost is $8.00 per equivalent unit, and with 5,000 units at 50% completion, the equivalent units for conversion are 2,500, leading to a total conversion cost of $20,000. Therefore, the material cost is $60,000 - $20,000 = $40,000. With 5,000 units at 80% completion for materials, the equivalent units for materials are 4,000, resulting in a cost per equivalent unit for materials of $40,000 / 4,000 = $10.00.

Black Company Uses the Weighted-Average Method in Its Process Costing