Black Company uses the weighted-average method in its process costing system.The company's ending work-in-process inventory consists of 5,000 units,80% complete with respect to materials and 50% complete with respect to labour and overhead.If the total dollar value of the inventory is $60,000 and the cost per equivalent unit for labour and overhead is $8.00,what is the cost per equivalent unit for materials?
A) $5.00.
B) $10.00.
C) $8.00.
D) $4.00.

Question

Quizplus · Accepted Answer

The total equivalent units for materials are 5,000 units * 80% = 4,000 units. The equivalent units for labor and overhead are 5,000 units * 50% = 2,500 units. The total cost for labor and overhead is 2,500 units * $8.00 = $20,000. Therefore, the cost for materials is $60,000 - $20,000 = $40,000. The cost per equivalent unit for materials is $40,000 / 4,000 units = $10.00.

Black Company Uses the Weighted-Average Method in Its Process Costing