Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs follow.
Beginning work in process: Materials, $60,000; conversion cost, $150,000
Current costs: Materials, $180,000; conversion cost, $480,000
Universal's equivalent-unit cost for materials is:
A) $4.50.
B) $6.00.
C) $8.00.
D) $9.60.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

To calculate the equivalent-unit cost for materials, we need to divide the total cost of materials by the equivalent units of production.

Total cost of materials = beginning inventory + current costs = $60,000 + $180,000 = $240,000

Equivalent units of production = (units completed and transferred out) + (ending inventory units x % completed)

Units completed and transferred out = 25,000 units

Ending inventory units x % completed = 15,000 units x 2/3 = 10,000 units

Total equivalent units of production = 25,000 + 10,000 = 35,000 units

Equivalent-unit cost for materials = Total cost of materials / Equivalent units of production

= $240,000 / 35,000 units

= $6.00 per unit

Therefore, the answer is B.

Universal Manufacturing Uses a Weighted-Average Process-Costing System