Materials are added at the end of the process in a company's curing department,the second stage of the production cycle.The following information is available for the month of July: Under the cost accounting system,the costs incurred on the lost units are absorbed by the remaining good units.Using the average cost method,what are the equivalent units for the materials unit cost calculation?
A)210,000
B)195,000
C)250,000
D)235,000

Question

Materials are added at the end of the process in a company's curing department,the second stage of the production cycle.The following information is available for the month of July:  Under the cost accounting system,the costs incurred on the lost units are absorbed by the remaining good units.Using the average cost method,what are the equivalent units for the materials unit cost calculation?
A)210,000 
B)195,000 
C)250,000 
D)235,000

Quizplus · Accepted Answer

To calculate the equivalent units for the materials unit cost calculation, we need to consider the percentage of completion of the lost units at the end of the curing department. As no information is given about the percentage of completion of lost units, we assume that lost units are 100% incomplete. So, the equivalent units for the materials unit cost calculation will be the units completed during the July month.

According to the information given, 65% of the 300,000 units were completed during the July month. Hence, the equivalent units for the materials unit cost calculation will be:
300,000 units x 65% = 195,000 units

Therefore, the best choice is B.

Materials Are Added at the End of the Process in a Company's