Kenney Co.uses process costing to account for the production of canned energy drinks.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs.Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs.April costs were $57,600 for materials and $64,000 for conversion costs.Ending inventory still in process was 6,400 units (100% complete for materials,50% for conversion).The cost per equivalent unit for materials using the weighted average method would be closest to:

Question

Quizplus · Accepted Answer

First, calculate the cost per equivalent unit (EUP) for materials:

Total material costs = beginning inventory + current period costs
Total material costs = $11,200 + $57,600
Total material costs = $68,800

Total equivalent units (EU) for materials = EUs completed + EUs in ending inventory
Total EU for materials = 19,200 + (6,400 * 100%)
Total EU for materials = 25,600

Cost per EUP for materials = total material costs / total EU for materials
Cost per EUP for materials = $68,800 / 25,600
Cost per EUP for materials = $2.6875

Next, calculate the cost per EUP for conversion costs:

Total conversion costs = beginning inventory + current period costs
Total conversion costs = $6,400 + $64,000
Total conversion costs = $70,400

Total EU for conversion costs = total EU for materials
Total EU for conversion costs = 25,600

Cost per EUP for conversion costs = total conversion costs / total EU for conversion costs
Cost per EUP for conversion costs = $70,400 / 25,600
Cost per EUP for conversion costs = $2.7500

Finally, add the cost per EUP for materials and conversion costs to get the total cost per EUP:

Total cost per EUP = cost per EUP for materials + cost per EUP for conversion costs
Total cost per EUP = $2.6875 + $2.7500
Total cost per EUP = $5.4375

Therefore, the cost per EUP for materials using the weighted average method would be closest to $3.5833 (rounded to four decimal places).

Kenney CoUses Process Costing to Account for the Production of Canned