The following information is available for Department A for the month of January
ID: 2369869 • Letter: T
Question
The following information is available for Department A for the month of January:Units Cost Work in process, January 1 (70% complete) 10,000 Direct materials $ 36,000 Direct labor 18,000 Manufacturing overhead 24,000 Total work in process, January 1 $ 78,000 Started in production during January 40,000 Costs added: Direct materials $108,000 Direct labor 48,000 Manufacturing overhead 61,040 Total costs added during January $217,040 Work in process, January 31 (80% complete) 4,000 Units completed and transferred out 42,000
Materials are added at the beginning of the process. Inspection takes place at the 50 percent point in the conversion process to determine spoiled units. Round unit costs to two decimal places. The company uses the weighted average cost flow assumption.
Refer to Figure 6-22. Department A's cost per unit for materials using the weighted average method is Select one: a. $2.16. b. $2.88. c. $3.43. d. $3.60. The following information is available for Department A for the month of January:
Units Cost Work in process, January 1 (70% complete) 10,000 Direct materials $ 36,000 Direct labor 18,000 Manufacturing overhead 24,000 Total work in process, January 1 $ 78,000 Started in production during January 40,000 Costs added: Direct materials $108,000 Direct labor 48,000 Manufacturing overhead 61,040 Total costs added during January $217,040 Work in process, January 31 (80% complete) 4,000 Units completed and transferred out 42,000
Materials are added at the beginning of the process. Inspection takes place at the 50 percent point in the conversion process to determine spoiled units. Round unit costs to two decimal places. The company uses the weighted average cost flow assumption.
Refer to Figure 6-22. Department A's cost per unit for materials using the weighted average method is Units Cost 10,000 $ 36,000 18,000 24,000 $ 78,000 40,000 $108,000 48,000 61,040 $217,040 4,000 42,000 Select one: a. $2.16. b. $2.88. c. $3.43. d. $3.60. Select one: a. $2.16. b. $2.88. c. $3.43. d. $3.60. a. $2.16. b. $2.88. c. $3.43. d. $3.60. Units Cost Work in process, January 1 (70% complete) 10,000 Direct materials $ 36,000 Direct labor 18,000 Manufacturing overhead 24,000 Total work in process, January 1 $ 78,000 Started in production during January 40,000 Costs added: Direct materials $108,000 Direct labor 48,000 Manufacturing overhead 61,040 Total costs added during January $217,040 Work in process, January 31 (80% complete) 4,000 Units completed and transferred out 42,000
Explanation / Answer
Cost per unit = Total cost / No. of units
But in our case, Opening Inventory is 70% completed and ending inventory 80% completed, Therefore,
Cost per unit = (108000) / [(10000 x 70%) + 42000 + (4000 x 80%)+(4000x50%) = 2.16
Answer is
a. $2.16
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