A company uses the weighted average method for inventory costing. During a perio

Question

A company uses the weighted average method for inventory costing. During a period, a production department had 26,000 units in beginning goods in process inventory which were 43% complete; the department completed and transferred 168,000 units. At the end of the period, 25,000 units were in the ending goods in process inventory and are 78% complete. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $102,000 and total labor costs added during the period are $726,900. Compute the equivalent cost per unit for labor.

$4.63.

$4.42.

$4.27.

$4.48.

$4.06.

Explanation / Answer

Labor Units Completed and transferred to next Deptt 168000 Ending WIP Labor:(25000 units*78%) 19500 Equivalent Units of Production 187500 Labor Cost of beginning WIP inventory 102000 Labor cost added during the period 726900 Total Cost 828900 Equivalent Units of Production 187500 Cost Per Equivalent Units 4.42

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