Outose Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 3% of the good units. Data for December 2017 are as follows:

What is the total cost per equivalent unit using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent.)
A) $3.86
B) $3.69
C) $7.90
D) $4.04

Question

Outose Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 3% of the good units. Data for December 2017 are as follows:

What is the total cost per equivalent unit using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent.)

What is the total cost per equivalent unit using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent.)
A) $3.86 
B) $3.69 
C) $7.90 
D) $4.04

Quizplus · Accepted Answer

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*Equivalent unit calculations:
Direct Materials: 22,700 + 76,300 = 99,000 units
Conversion Costs: 72,100 + (18,100 x 60%) + 8800 = 91,760 units
Total cost per equivalent unit = $3.86 + $4.04 = $7.90

Outose Concept Manufactures Small Tables in Its Processing Department