Question

Zee Corporation had 3,600 units one-third completed at the beginning of the period, 12,000 units were completed and transferred during the period, 2,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: Work in process, beginning of period ($8 per unit for Direct Materials):

$37,200 Costs added during period: Direct materials $83,200 Direct labor 62,000 Factory overhead 24,800 Assume that all direct materials are placed in process at the beginning of production and Zee Corporation uses FIFO method of inventory costing.

What is the DM cost/equivalent unit of the period?

Select one: a. $8.00 b. $7.75 c. $6.75 d. $7.00

Answer 1

Unit completed and transferred	12000
(-) Units in beginning work in process	3600
Units started and completed during the period	8400

As the materials are added at the beginning of the process, they 100% completed when they are introduced in the process .

	Direct materials
Units started and completed during the period	8400
(+) Beginning work in process equivalent units [ Beginning work in process units * ( 1 - Fraction completed ) ]	0
(+) Ending work in process equivalent units [ Ending work in process units * Fraction completed ]	2000
Equivalent units of production	10400
Cost added during the period	83200
(/) Equivalent units	10400
DM cost/equivalent unit	8.00