Exhibit 4-1
Silva Coporation uses the weighted average process costing method.The Mixing Department at Silva had 17,000 units in beginning inventory.These units contained $70,000 in direct materials,$80,000 in direct labor,and $60,000 in overhead.During the period,the department incurred costs of $320,000 in direct materials,$400,000 in direct labor and $200,000 in overhead and started 80,000 units.Ending inventory consisted of 6,000 units which were 100% complete with respect to direct materials and 50% complete with respect to direct labor and overhead.
-Refer to Exhibit 4-1.What is the cost per equivalent unit for direct labor (rounded to the nearest cent)?
A)$5.28
B)$5.11
C)$4.94
D)$0.86
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for direct labor, we need to divide the total cost for direct labor by the equivalent units of direct labor.

Direct labor cost = $400,000
Equivalent units of direct labor = (Direct labor and overhead costs of beginning WIP units) + (Direct labor and overhead costs added during the period x % complete for direct labor) 
= ($80,000 x 100%) + ($200,000 x 50%)
= $80,000 + $100,000
= $180,000

Cost per equivalent unit for direct labor = Direct labor cost / Equivalent units of direct labor 
= $400,000 / $78,500
= $5.1075, rounded to the nearest cent
= $5.11 (B)

Exhibit 4-1 Silva Coporation Uses the Weighted Average Process Costing Method.The Mixing