A company uses a process cost accounting system and the Weighted Average invento

Question

A company uses a process cost accounting system and the Weighted Average inventory valuation method. Its Assembly Department's beginning inventory consisted of 50,000 units, 3/4 complete with respect to direct labor and overhead. The department started and finished 127,500 units this period. The ending inventory consists of 40,000 units that are 1/4 complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. Goods in Process included direct labor costs of $30,000 and overhead costs of $40,000 for the period. The Overhead cost per equivalent unit is:

$0.126
$0.160
$0.178
$0.213
$0.373

Explanation / Answer

No of equivalent units=50,000 * 1/4 +127,500 +40,000*1/4 =150000 units Overhead cost per equivalent unit =($40,000)/150000 =$$0.213

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