Question

The Daltry Company manufactures a single product on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Direct materials are added at the end of the production process. Conversion costs are allocated evenly throughout production. The company uses weighted-average process costing.

Data for the Assembly Department for April are:

      Work in process, beginning inventory                      400 units

            Conversion costs (30% complete)

      Units started during April                                      1,200 units

      Work in process, ending inventory:                          250 units

            Conversion costs (50% complete)

Costs for April:

      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

1.) What is the direct materials cost per equivalent unit for Daltry during April?

2.) What is the conversion cost per equivalent unit for Daltry in April?

Answer 1

Equivalent units of production (EUP) - Weighted Average method
	Units	% material	EUP-Materials	% Conversion	EUP- Conversion
Units Completed and transferred out (400+1200-250)	1350	100%	1350	100%	1350
units of Ending work in process	250	0%	0	50%	125
Equivalent units of production			1350		1475

Cost per Equivalent unit:	Material	Conversion
Cost of Beginning Work in Process	$2,30,000	$2,20,000
Cost added	$7,00,000	$11,75,000
Total Costs	$9,30,000	$13,95,000
/Equivalent units of Production	1350	1475
Cost per Equivalent unit of Production	$688.89	$945.76