Perrette Motor Company rebuilds automobile engines that have been damaged or are

Question

Perrette Motor Company rebuilds automobile engines that have been damaged or are in need of extensive repair. The rebuilt engine has a 100,000-mile warranty and is purchased by auto shops, large motor pools in companies and governmental units, and some individual auto owners. The plant at Dayton, Ohio, specializes in the Ford V6 engine. Approximately 1,140 to 1,340 engines are rebuilt each month, and the costs of the plant are assigned to monthly production using weighted-average process costing. The current month began with a work-in-process inventory of 460 engines which were 50% complete for materials and 50% complete for conversion costs. The materials cost in beginning work-in-process was $153,600, while the conversion cost was $150,240. A total of 1,040 engines were completed and shipped out during the month, and total materials cost of $1,060,800 and conversion cost of $1,154,400 were incurred during the month. The ending work-in-process of 560 units was 50% complete for materials and 30% complete for conversion costs. Compute the cost per equivalent unit for materials and conversion for the month.

Explanation / Answer

Opening 460 engines [50% material, 50% conversion cost] Material cost 153600 Conversion cost 150240 Closing 560 engines [50% material, 30% conversion cost] Engine shipped : 1040 engine Engine produced during the year Engine shipped 1040 Less: 0pening 460 Add: Closing 560 1140 Material cost per unit 930.5263 Conversin cost per unit 1012.632

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