Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. Of the $12,500, $8,000 was for material and $4,500 was for conversion costs. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. If the average cost method is used the material cost per unit (to the nearest cent) would be:
A) $2.04
B) $1.59
C) $1.91
D) $2.00

Question

Quizplus · Accepted Answer

The average cost method assigns the total cost of production to all units produced during the period. The total cost of production is the sum of the beginning work in process inventory, the cost of materials added during the period, the cost of direct labor, and the cost of factory overhead. In this case, the total cost of production is $12,500 + $28,700 + $32,450 + $18,710 = $92,360. The average cost per unit is $92,360 / 15,000 units = $2.04.

Department E Had 4,000 Units in Work in Process That