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Compute the cost per equivalent unit - In May 2018 Betty Inc. had total costs to...

Compute the cost per equivalent unit - In May 2018 Betty Inc. had total costs to account for of $835000 of which $500000 were direct materials and the remainder were conversion costs. The company had 1250000 total equivalent units of direct materials and 1232000 equivalent units of conversion costs. Compute the cost per equivalent units for direct materials and the cost per equivalent units for conversion costs.

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Answer #1

Cost per unit of Direct Material

Cost incurred on direct material = 500000$

No.unit procure =1250000 Equivalent units

Cost per unit = Cost incurred on direct materials/No of procure units

=500000/1250000

=0.4$ per unit

Cost per unit of conversion of goods

No. of Equivalent unit converse = 1232000 Units

Cost incurred on conversion = 835000$-500000$

=335000$

Cost per unit = Cost Incurred on conversion/No. of equivalent unit converted

=335000$/1232000

=0.2720$

Total cost per unit =0.40$+0.2720$

=0.670$

Assumption : No abnormal loss incurred on conversion of any unit

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