The May Corporation uses a process system. During the current period, 2600 units were started and 2100 units were completed and transferred out. Ending units were 50% complete for materials and 45% complete for conversion costs. Direct materials costs added were $44,405 and conversion costs added were $29,870. There was no beginning WIP Inventory and conversion costs are added evenly throughout the process. At the end of the period, the cost per equivalent unit for direct materials would be closest to
A)$12.85.
B)$18.90.
C)$21.15.
D)$14.22.

Question

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for direct materials, we need to divide the total direct materials costs added by the equivalent units of production.

Equivalent units of production:
Completed and transferred out = 2100 units
Ending WIP: 
- Materials: 50% complete, so add 50% of 500 units = 250 units
- Conversion costs: 45% complete, so add 45% of 500 units = 225 units
Total equivalent units of production = 2100 + 250 + 225 = 2575 units

Cost per equivalent unit for direct materials = $44,405/2575 units = $17.24/unit
Rounding to the nearest cent, the answer is $18.90, which is option B.

The May Corporation Uses a Process System