Question

# Sparky Corporation uses the weighted-average method of process costing. The following information is available for February...

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

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

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