Question

The Weiss Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

Data for the Assembly for April 2008 are :
Work in process, beginning inventory	400 units
Direct materials (100% complete)
Conversion costs (40% complete)
Units started during April	1,200 units
Work in process, ending inventory:	250 units
Direct materials (100% complete)
Conversion costs (80% complete)

Costs for April 2008:
Work in process, beginning inventory:
Direct materials	$230,000
Conversion costs	$220,000
Direct materials costs added during April	$700,000
Conversion costs added during April	$1,175,000

What is the direct materials cost per equivalent unit during April?

	A.	$1,250.00
	B.	$1,241.94
	C.	$575.00
	D.	$581.25

	250 units

Costs for April 2008:
	$230,000

Answer 1

• All working forms part of the answer
• Working

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	1,350 [400 + 1200 – 250]	100%	1,350	100%	1,350
Units of ENDING WIP	250	100%	250	80%	200
Equivalent Units of Production			1,600		1,550

• Answer

COST per EUP			Material
Cost of Beginning WIP			$        230,000.00
Cost incurred during the period			$        700,000.00
Total Costs		Costs	$        930,000.00
Equivalent units of production		EUP	1,600 calculated above
Cost per EUP			$         581.25 = Answer

• Correct Answer = Option ‘D’ $ 581.25