During March,the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March.March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor.At the end of March,30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor.The production department incurred direct materials cost of $253,000 and its beginning inventory included materials cost of $93,500.Compute the direct materials cost per equivalent unit for the department using the weighted-average method.
A)$1.53.
B)$2.48.
C)$2.10.
D)$2.57.
E)$2.40.

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for direct materials using the weighted-average method.

Equivalent units of production for materials:
Units started and completed in March = 110,000
Units in process at the end of March = 30,000 (100% complete with respect to materials)
Beginning inventory units = 25,000 (100% complete with respect to materials)
Equivalent units of production for materials = (110,000 + 30,000 + 25,000) = 165,000

Next, we need to calculate the total direct materials cost for March.

Total direct materials cost for March = Direct materials cost of units started and completed in March + Direct materials cost of ending work in process inventory
Total direct materials cost for March = ($253,000) + (materials cost of 30,000 units in ending work in process inventory x 100% complete with respect to materials)
Total direct materials cost for March = ($253,000) + ($99,000) = $352,000

Now, we can calculate the direct materials cost per equivalent unit for the department.

Direct materials cost per equivalent unit = Total direct materials cost for March ÷ Equivalent units of production for materials
Direct materials cost per equivalent unit = ($352,000) ÷ (165,000)
Direct materials cost per equivalent unit = $2.124 rounded to nearest cent or $2.10

Therefore, the best choice is C.

During March,the Production Department of a Process Operations System Completed