Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows: Using the average cost method,the equivalent units for the materials unit cost calculation are:
A)38,000.
B)52,000.
C)56,000.
D)37,000.

Question

Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows:  Using the average cost method,the equivalent units for the materials unit cost calculation are:
A)38,000. 
B)52,000. 
C)56,000. 
D)37,000.

Quizplus · Accepted Answer

The equivalent units for the material unit cost calculation using the average cost method are calculated by adding the number of units started and the equivalent units of work done during the period. From the given data, the number of units started and completed in March is 38,000. Therefore, the equivalent units for the material unit cost calculation is also 38,000. However, the problem states that materials are added at the beginning of the process, which means that there are also equivalent units of work in progress (WIP) at the end of the process. These WIP units must also be included in the equivalent units for the material cost calculation. Since there were 14,000 WIP units at the end of March, the total equivalent units for the material cost calculation is 38,000 + 14,000 = 52,000. Therefore, the correct answer is B.

Stanley Company Adds Materials at the Beginning of the Process