A disinfectant manufacturer offers the following information: $\begin{array}{|l|r|}
\hline \text { WIP inventory, January 1 } & 0 \text { units } \
\hline \text { Units started } & 21,500 \text { units } \
\hline \begin{array}{l}
\text { Units completed and } \
\text { transferred out }
\end{array} & 14,500 \text { units } \
\hline \text { WIP inventory, December 31 } & 7,000 \text { units } \
\hline \text { Direct materials } & \$ 252,500 \
\hline \text { Direct labor } & \$ 592,500 \
\hline \text { Manufacturing overhead } & \$ 375,100 \
\hline
\end{array}$ The units in ending WIP inventory were 60% complete for materials and 40% complete for conversion costs.
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On December 31,the cost per equivalent unit for materials would be closest to:

Question

Quizplus · Accepted Answer

The cost per equivalent unit for materials is calculated by dividing the total cost of materials by the total equivalent units of production. The total equivalent units of production is calculated by adding the equivalent units of production for the units completed and transferred out to the equivalent units of production for the units in ending WIP inventory. The equivalent units of production for the units completed and transferred out is simply the number of units completed and transferred out. The equivalent units of production for the units in ending WIP inventory is calculated by multiplying the number of units in ending WIP inventory by the percentage of completion for materials. In this case, the total equivalent units of production is 14,500 units + (7,000 units x 60%) = 18,300 units. The total cost of materials is $252,500. Therefore, the cost per equivalent unit for materials is $252,500 / 18,300 units = $13.85.

A Disinfectant Manufacturer Offers the Following Information The Units in Ending WIP Inventory Were 60% Complete for WIP