Fantastic Decorations Corporation The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:
The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are:
Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a total cost of $16,000. What is the material cost per equivalent unit in Decorating?

Question

Fantastic Decorations Corporation The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:
 The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are:
 Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a total cost of $16,000. What is the material cost per equivalent unit in Decorating?

Quizplus · Accepted Answer

To calculate the material cost per equivalent unit in Decorating, we need to use the FIFO method of process costing. From the information given:

- Beginning WIP units: 600 wreaths, 80% complete as to material = 480 equivalent units
- Started and completed units: 8,000 wreaths, 100% complete as to material = 8,000 equivalent units
- Ending WIP units: 300 wreaths, 50% complete as to material = 150 equivalent units

Total equivalent units = 8,630
Total material cost = $17,430

Material cost per equivalent unit = Total material cost / Total equivalent units
= $17,430 / 8,630
= $2.02

Therefore, the material cost per equivalent unit in Decorating is $2.02. Converted to per wreath, it is $2.02 x 2 = $4.04.

Now, we can look at the answer choices given:

A) $8.50 - This is incorrect as it is almost four times the actual material cost per wreath.
B) $8.65 - This is incorrect as it is still almost four times the actual material cost per wreath.
C) $8.80 - This is incorrect as it is still almost four times the actual material cost per wreath.
D) $9.04 - This is incorrect as it is still almost four times the actual material cost per wreath.

Therefore, the best choice is A, as it is the only one that is close to the actual material cost per wreath calculated using the FIFO method of process costing.

Fantastic Decorations Corporation the Fantastic Decorations Corporation Makes Wreaths in Two