Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were: A total of 6,800 units were started and 6,100 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) $22.04
B) $22.81
C) $23.34
D) $22.56

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 400 units. The costs and percentage completion of these units in beginning inventory were:  A total of 6,800 units were started and 6,100 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) $22.04 
B) $22.81 
C) $23.34 
D) $22.56

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for materials, we need to add the total cost of beginning inventory and current period to the materials cost for current period and divide it by equivalent units of material for the current period.

Total cost of beginning inventory = $8,200
Cost incurred during the month = $152,184
Total materials cost = $157,040
Equivalent units of material = (units started and completed + ending work in process * percentage completion) = (6,100 + 510*85%) = 6,456

Therefore, cost per equivalent unit for materials = ($8,200 + $152,184 + $157,040)/6,456 = $23.34

So option C is the closest choice for the cost per equivalent unit for materials.

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