At Opal Incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: What is the cost per equivalent unit for direct materials?
A)$2.68
B)$3.27
C)$3.48
D)$2.40

Question

At Opal Incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include:  What is the cost per equivalent unit for direct materials?
A)$2.68 
B)$3.27 
C)$3.48 
D)$2.40

Quizplus · Accepted Answer

Since direct materials are added at the beginning of the process, there is no beginning work in process inventory for direct materials. Therefore, total cost of direct materials is equal to the cost of direct materials added during the period. The cost of direct materials added during the period is $151,720 and the equivalent units for direct materials is 56,600. To find the cost per equivalent unit for direct materials, we divide the cost of direct materials added during the period by the equivalent units for direct materials: $151,720 / 56,600 = $2.68. Therefore, the cost per equivalent unit for direct materials is $2.68.

At Opal Incorporated, Direct Materials Are Added at the Beginning