The USA Company manufactures flags in a single process. The following information has been provided by USA Company:
$$\begin{array} { | l | l | }
\hline \text { Work in process inventory, Jan. 1 } & - 0 - \text { units } \
\hline \text { Units started in production } & 18,000 \text { units } \
\hline \text { Work in process inventory, Dec. } 31 & 6,000 \text { units } \
\hline \text { Production costs: } & \
\hline \text { Direct materials } & \$ 213,885 \
\hline \text { Direct labor } & \$ 577,500 \
\hline \text { Manufacturing overhead } & \$ 391,875 \
\hline
\end{array}$$ The units still in process are 45% complete with respect to direct materials and 35% complete with respect to conversion costs. What was the cost per equivalent unit of production for direct materials?
A) $17.81
B) $14.55
C) $15.00
D) $12.57

Question

The USA Company manufactures flags in a single process. The following information has been provided by USA Company:
$$\begin{array} { | l | l | } 
\hline \text { Work in process inventory, Jan. 1 } & - 0 - \text { units } \
\hline \text { Units started in production } & 18,000 \text { units } \
\hline \text { Work in process inventory, Dec. } 31 & 6,000 \text { units } \
\hline \text { Production costs: } & \
\hline \text { Direct materials } & \$ 213,885 \
\hline \text { Direct labor } & \$ 577,500 \
\hline \text { Manufacturing overhead } & \$ 391,875 \
\hline
\end{array}$$ The units still in process are 45% complete with respect to direct materials and 35% complete with respect to conversion costs. What was the cost per equivalent unit of production for direct materials?
A) $17.81
B) $14.55
C) $15.00
D) $12.57

Quizplus · Accepted Answer

To calculate the cost per equivalent unit of production for direct materials, first, determine the equivalent units for direct materials. The units completed and transferred out are 18,000 units started minus 6,000 units still in process, equaling 12,000 units. The units still in process are 45% complete for direct materials, so the equivalent units for direct materials in process are 6,000 units * 45% = 2,700 units. The total equivalent units for direct materials are 12,000 units (completed) + 2,700 units (in process) = 14,700 units. The total direct materials cost is $213,885. Therefore, the cost per equivalent unit for direct materials is $213,885 / 14,700 units = $14.55.

The USA Company Manufactures Flags in a Single Process The Units Still in Process Are 45% Complete with Respect