Question

Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 95,000 units, 70% complete as to materials and 20% complete as to conversion.
Units started and completed: 280,000.
Units completed and transferred out: 375,000.
Ending Inventory: 37,500 units, 30% complete as to materials and 10% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $52,200.
Costs in beginning Work in Process - Conversion: $94,700.
Costs incurred in October - Direct Materials: $802,800.
Costs incurred in October - Conversion: $934,300.

Calculate the cost per equivalent unit of materials.

Answer 1

Calculation of cost per equivalent unit of materials.

Total Cost under weighted average method = Costs in beginning work in process + Costs incurred in october

Total Cost under weighted average method = 52200 + 802800 =$855000

Equivalent units of materials = Units completed and transferred out + Ending Inventory *% of completion

Equivalent units of materials = 375000 + 37500*30%

Equivalent units of materials = 375000 +11250 =386250

cost per equivalent unit of materials.=Total Cost under weighted average method/Equivalent units of materials

cost per equivalent unit of materials.=855000/386250 =$2.21 per unit