Livingston Co.uses process costing to account for the production of elastic bands.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs.April costs were $72,000 for materials and $80,000 for conversion costs.During April 8,000 units were completed.Ending work in process inventory was 4,000 units (100% complete for materials,50% for conversion).The equivalent cost per unit for materials using the weighted average method would be closest to:
A)$1.8333
B)$6.0000
C)$7.1667
D)$14.5000

Question

Quizplus · Accepted Answer

The equivalent cost per unit for materials is calculated by adding the beginning inventory costs for materials to the costs added during the period, then dividing by the total equivalent units for materials. Here, beginning inventory for materials is $14,000, and costs added during the period are $72,000, totaling $86,000. All units (both completed and in ending inventory) are 100% complete for materials, so the equivalent units for materials are 8,000 (completed) + 4,000 (ending inventory) = 12,000 units. Thus, the cost per equivalent unit for materials is $86,000 / 12,000 units = $7.1667.