The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows: All direct materials are placed in process at the beginning of the process and the average cost method is used to cost inventories.
The materials cost per equivalent unit (to the nearest cent) for April is:
A) $2.60
B) $2.81
C) $3.02
D) $2.26

Question

The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows:  All direct materials are placed in process at the beginning of the process and the average cost method is used to cost inventories.
The materials cost per equivalent unit (to the nearest cent) for April is:
A) $2.60 
B) $2.81 
C) $3.02 
D) $2.26

Quizplus · Accepted Answer

To calculate the materials cost per equivalent unit, we need to divide the total materials cost for April by the total equivalent units produced.

Total materials cost for April = debits to Work in Process--Assembly Department for April = $272,400

To calculate the total equivalent units produced, we need to consider both the units that were completed and transferred out of the department and the units that were not yet completed and remain in process.

Units completed and transferred out = 36,000 
Units in ending work in process inventory = 4,000

Equivalent units = units completed and transferred out + (ending work in process inventory * percentage complete) 
Percentage complete = 80% (given in the table)

Equivalent units = 36,000 + (4,000 * 0.8) = 39,200

Materials cost per equivalent unit = total materials cost / equivalent units 
Materials cost per equivalent unit = $272,400 / 39,200 = $6.95 
Rounded to the nearest cent, the materials cost per equivalent unit for April is $2.81.

Therefore, the best choice is B.

The Debits to Work in Process--Assembly Department for April, Together