Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units:
Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 110,000.
Units completed and transferred out: 135,000.
Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $43,000. Costs in beginning Work in Process - Conversion: $48,850.
Costs incurred in February - Direct Materials: $287,000. Costs incurred in February - Conversion: $599,150.
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Calculate the cost per equivalent unit of materials.
A) $1.74
B) $2.05
C) $2.36
D) $2.00
E) $2.61

Question

Quizplus · Accepted Answer

The cost per equivalent unit of materials is calculated by dividing the total materials cost by the total equivalent units for materials. Total materials cost = $43,000 (beginning) + $287,000 (incurred) = $330,000. Equivalent units for materials = 135,000 (completed and transferred) + 30,000 (ending inventory) = 165,000. Cost per equivalent unit = $330,000 / 165,000 = $2.00.

Sparky Corporation Uses the Weighted-Average Method of Process Costing