Refer to LuLu, Inc. What would be the total cost per equivalent unit of production?

Question

Quizplus · Accepted Answer

The total cost per equivalent unit of production can be calculated by adding up the total cost of beginning work in process inventory and the total cost added during the period, and dividing this by the equivalent units of production. Using the information provided in the question, the total cost of beginning work in process inventory was $14,000 and the total cost added during the period was $112,500. The equivalent units of production were 10,000 for direct materials and 8,000 for conversion costs. Therefore, the total equivalent units of production were 18,000.

Total cost per equivalent unit = (Total cost of beginning work in process inventory + Total cost added during the period) ÷ Equivalent units of production
Total cost per equivalent unit = ($14,000 + $112,500) ÷ 18,000
Total cost per equivalent unit = $126,500 ÷ 18,000
Total cost per equivalent unit = $7.03 + $4.23
Total cost per equivalent unit = $11.26, which is closest to option C.