Question

Inacio Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:
Units in beginning work in process inventory		1,300
Materials costs	$	13,400
Conversion costs	$	5,500
Percent complete with respect to materials		75	%
Percent complete with respect to conversion		20	%
Units started into production during the month		10,000
Units transferred to the next department during the month		8,900
Materials costs added during the month	$	172,500
Conversion costs added during the month	$	242,500
Ending work in process inventory:
Units in ending work in process inventory		2,400
Percent complete with respect to materials		90	%
Percent complete with respect to conversion		30	%

The cost per equivalent unit for materials for the month in the first processing department is closest to:

Multiple Choice

• $15.41

• $16.35

• $15.10

• $16.81

Answer 1

		Material
	Units	Percentage of Completion	Equivalent units
Units Transferred	8,900	100%	8,900
Ending WIP ( 1,300 + 10,000 (-) 8,900 )	2,400	90%	2,160
		Equivalent units	11,060
Total Material Costs     =   Materials costs + Costs Added     =    $ 13,400 + $ 172,500	$ 185,900
Cost per Equivalent Unit    = Total Material Costs/ Equivalent units    =   $ 185,900 / 11,060	$ 16.81
Option (d) is Correct