Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department: Units:
Beginning Inventory: 80,000 units, 60% complete as to materials and 20% complete as to conversion.
Units started and completed: 250,000.
Units completed and transferred out: 330,000.
Ending Inventory: 30,000 units, 40% complete as to materials and 10% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $37,200. Costs in beginning Work in Process - Conversion: $79,700.
Costs incurred in October - Direct Materials: $646,800. Costs incurred in October - Conversion: $919,300.
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Calculate the cost per equivalent unit of materials.
A) $2.33
B) $1.89
C) $2.00
D) $2.59
E) $2.20

Question

Quizplus · Accepted Answer

The cost per equivalent unit of materials is calculated by dividing the total material costs by the equivalent units of materials. Total material costs = $37,200 (beginning) + $646,800 (incurred) = $684,000. Equivalent units of materials = 330,000 (completed) + 30,000 * 40% (ending inventory) = 342,000. Cost per equivalent unit = $684,000 / 342,000 = $2.00.

Richards Corporation Uses the Weighted-Average Method of Process Costing