Pete's Gold Co. is a factory that produces gold plastic coins that are sold at party stores around the country. They are attempting to determine whether they would prefer to use the First-In, First-Out (FIFO) or Weighted-Average method for their process costing. Their unit production information for the most recent year is as follows:
The units above produced the following costs:
If Pete's chooses the Weighted-Average method, then what is their equivalent cost per unit for Direct Materials? (Round units to whole number and cost to two decimal places.)

Question

Pete's Gold Co. is a factory that produces gold plastic coins that are sold at party stores around the country. They are attempting to determine whether they would prefer to use the First-In, First-Out (FIFO) or Weighted-Average method for their process costing. Their unit production information for the most recent year is as follows:
 The units above produced the following costs:
 If Pete's chooses the Weighted-Average method, then what is their equivalent cost per unit for Direct Materials? (Round units to whole number and cost to two decimal places.)

Quizplus · Accepted Answer

This question requires calculation of both the equivalent units and equivalent costs for Direct Materials using the Weighted-Average method before calculating the equivalent cost per unit. This method does not account for Beginning WIP Inventory separately. (31,721 × 100%) + (2,788 × 100%) = 31,721 + 2,788 = 34,509 units. To calculate the equivalent costs, use the beginning costs and the costs added during the period. $400 + $13,435 = $13,835. Now, divide the cost by the equivalent units that were calculated. $13,835/34,509 = $0.40 per unit.