Question

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department:

Units:
Beginning Inventory: 33,000 units, 100% complete as to materials and 60% complete as to conversion.
Units started and completed: 124,000.
Units completed and transferred out: 157,000.
Ending Inventory: 33,500 units, 100% complete as to materials and 25% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $50,000.
Costs in beginning Work in Process - Conversion: $55,850.
Costs incurred in February - Direct Materials: $339,610.
Costs incurred in February - Conversion: $606,150.

Calculate the cost per equivalent unit of materials.

Multiple Choice

• $2.05

• $2.04

• $1.64

• $2.39

• $2.63

Answer 1

Answer:

Calculation of cost per equivalent unit of materials:

Cost per equivalent units of material = (Beginning Material cost + Cost incurred) / Equivalent unit of materials*

= ($50,000 + $339,610) / 190,500 units

= $2.045196 or $2.05 (Rounded off)

Accordingly, Option (A) i.e. $2.05 is the correct answer.

Note:

Determination of Equivalent unit of materials*

Particulars	Material
In respect of goods transferred out:
: Material (157,000 x 100%)	157,000
In respect of ending work in progress inventory
: Material (33,500 x 100%)	33,500
Equivalent unit of materials	190,500