Question

15. The debits to Work in Process—Assembly Department for May, together with data concerning production, are as follows:

May 1, work in process:
Materials cost, 3,000 units	$7,000
Conversion costs, 3,000 units, 50% completed	5,200
Materials added during May, 10,000 units	26,500
Conversion costs during May	32,400
Goods finished during May, 11,500 units	0
May 31 work in process, 1,500 units, 50% completed	0

All direct materials are placed in process at the beginning of the process, and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for May is

a.$3.24

b.$2.30

c.$2.65

d.$3.94

Answer 1

Solution:

	Units	% material	EUP-Materials
units in process, May 1	3000	0%	0
Units started and completed during May (11500- 3000)	8500	100%	8500
Toal units completed and transferred out			8500
Units in process, May 31	1500	100%	1500
Equivalent units of production			10000

Cost per Equivalent unit:	Material
Cost added during the month	26500
/Equivalent units of Production	10000
Cost per Equivalent unit of Production	2.65

Hence option "c" is correct.