Edwards Company produces calendars in a one-department process. The following information is available:
The units still in process are 100 percent complete with respect to direct materials and 60 percent complete with respect to conversion costs.
-What is the unit cost of direct materials?
A) $5.00
B) $4.33
C) $4.00
D) $1.00

Question

Edwards Company produces calendars in a one-department process. The following information is available:
  The units still in process are 100 percent complete with respect to direct materials and 60 percent complete with respect to conversion costs.
-What is the unit cost of direct materials?
A) $5.00 
B) $4.33 
C) $4.00 
D) $1.00

Quizplus · Accepted Answer

The unit cost of direct materials can be calculated as total direct materials cost divided by the equivalent units of direct materials. 
Since the units in process are 100% complete with respect to direct materials, we only need to consider the direct materials cost of the completed units. From the given information, we know that 11,000 units have been completed (100% complete), and the direct materials cost is $44,000. 
Equivalent units of direct materials = Number of completed units = 11,000 
Unit cost of direct materials = Total direct materials cost / Equivalent units of direct materials = $44,000 / 11,000 units = $4.00 per unit.

Edwards Company Produces Calendars in a One-Department Process