Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 900 units. The costs and percentage completion of these units in beginning inventory were: A total of 7,300 units were started and 6,600 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs.The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $19.19
B) $19.96
C) $20.75
D) $19.71

Question

Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 900 units. The costs and percentage completion of these units in beginning inventory were:  A total of 7,300 units were started and 6,600 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
 The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs.The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $19.19 
B) $19.96 
C) $20.75 
D) $19.71

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for materials, we need to use the weighted-average method formula:

Cost per equivalent unit = (Beginning inventory cost + Additional cost) / (Beginning inventory units + Units started)

Beginning inventory cost = $4,590 + $4,950 + $6,840 = $16,380
Beginning inventory units = 900

Additional cost = $30,450 + $34,155 + $31,120 = $95,725
Units started = 7,300

Cost per equivalent unit = ($16,380 + $95,725) / (900 + 7,300) = $20.75

Therefore, the closest answer choice is C, $20.75.

Domingo Corporation Uses the Weighted-Average Method in Its Process Costing