Department E had 4,000 units in Work in Process that were 40% completed at the b

Question

Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. Of the $12,500, $8,000 was for material and $4,500 was for conversion costs. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. If the average cost method is used the material cost per unit (to the nearest cent) would be:

Explanation / Answer

Department E Details Units Material % Material Equivalent Units Material Cost Opening WIP                       4,000                100                      4,000                 8,000 Material Added and completed                    11,000                100                   11,000               22,550 closing WIP                       3,000                100                      3,000                 6,150 Total                   18,000               36,700 Average material cost per unit $               2.04

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